{"url_path":"/sec/mobi/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-06-04","source_url":"https://www.sec.gov/Archives/edgar/data/1489993/0001193125-26-257552-index.html","accession_number":"0001193125-26-257552","cik":"0001489993","ticker":"MOBI","issuer_name":"Mobia Medical, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1489993/0001193125-26-257552-index.html","primary_entity_key":"0001489993","primary_entity_name":"Mobia Medical, Inc."},"word_count":44230,"has_tables":true,"body_markdown":"Item 1A. Risk Factors\n\nInvesting in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this Quarterly Report, including our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our other public filings. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our common stock. Certain statements below are forward-looking statements. See the section titled “Special Note Regarding Forward-Looking Statements” appearing elsewhere in this Quarterly Report.\n\nRisks Related to Our Business and Industry\n\nWe have a history of net losses, and we expect to continue to incur losses for the foreseeable future. If we ever achieve profitability, we may not be able to sustain it.\n\nWe have incurred losses since our inception and expect to continue to incur losses for the foreseeable future. We reported net losses of $17.7 million and $10.7 million for the three months ended March 31, 2026 and 2025, respectively. As a result of these losses, as of March 31, 2026, we had an accumulated deficit of approximately $175.5 million. We expect to continue to incur significant sales and marketing, research and development, clinical and regulatory, and other expenses as we expand our commercial organization, increase marketing efforts to drive adoption of Vivistim Therapy, expand existing relationships with our customers, conduct clinical trials on our existing and future products and develop new products or add new features to our existing products, pursue any required regulatory clearances or approvals, and seek to establish broader commercial coverage. In addition, we expect our general and administrative expenses to increase due to the additional costs associated with being a public company. Additionally, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown obstacles as we continue to build and scale our business. The net losses that we incur may fluctuate significantly from period to period. We will need to generate significant additional revenue in order to achieve and sustain profitability. Even if we achieve profitability, we cannot be sure that we will remain profitable for any period of time.\n\nIf we fail to manage our growth effectively, our business could be materially and adversely affected.\n\nWe have experienced recent rapid growth and anticipate further growth. For example, for the three months ended March 31, 2026, our revenue was $12.1 million compared to revenue of $5.7 million for the three months ended March 31, 2025, an increase of 113% year-over-year. This growth has placed significant demands on our management, financial, operational, technological and other resources, and we expect that our future growth will continue to place significant demands on our management and other resources and will require us to continue developing and improving our operational, financial and other internal controls. In particular, continued growth increases the challenges involved in a number of areas, including managing our third-party manufacturers and supplier relationships and ensuring adequate inventory is available, recruiting and retaining sufficient skilled personnel for leadership positions, sales force and other functions, providing adequate training and supervision to maintain our high-quality standards and preserving our culture and values. We may not be able to address these challenges in a cost-effective manner, or at all.\n\nTo achieve our business objectives, we must also successfully increase our supply of products and components from third-party manufacturers to meet expected demand. If demand decreases, we will need to implement capacity and cost reduction measures involving restructuring costs. If demand increases, we will be required to make capital expenditures related to increased production. This would also put pressure on our third-party manufacturing capabilities. For example, a sudden increase in demand could require increased production of components, such as the implantable pulse generator (IPG) or stimulation lead. Adapting to changes in\n\n \n\n39\n\n \n\ndemand inherently involves a delay because it takes time to identify the change the market is undergoing and to implement any measures to take as a result. Finally, capacity adjustments are inherently risky because there is imperfect information, and sales trends may rapidly intensify, ebb, or even reverse. We may be unable to accurately or timely predict trends in demand and customer behavior or to take appropriate measures to mitigate risks and react to opportunities resulting from such trends. Any inability in the future to identify or to adequately and effectively react to changes in demand could have a material adverse effect on our business, financial condition and results of operations.\n\nIn addition, we may experience challenges managing the inventory of components of our Vivistim System, which can lead to excess inventory. Inventory levels in excess of customer demand may result in inventory obsolescence or expiration, which could potentially result in inventory write-downs or write-offs, which could be substantial and could impact our gross margins. Actual future demand could be less than our forecast, which may result in additional reserves and write-downs in the future, or actual demand could be stronger than our forecast, which may result in a reduction to previously recorded reserves and write-downs in the future and increase the volatility of our operating results.\n\nIn the future, we may also experience difficulties with quality control, component supply and shortages of qualified personnel, among other problems. These problems could result in delays in product availability, product quality issues, delays in our ability to reach our sales potential, delays in the development and launch of new products and increases in expenses. Any such delays, issues or increased expenses could adversely affect our business, financial condition and results of operations. In addition, rapid and significant growth will place a strain on our administrative and operational infrastructure, particularly as a newly public company. In order to manage our operations and growth, we will need to continue to improve our operational and management controls, hiring process, reporting and information technology systems and financial internal control procedures. If we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, reach our sales potential, satisfy customer requirements or maintain high-quality product offerings, which could have a material adverse effect on our business, financial condition and results of operations.\n\nOur success depends entirely on our currently marketed Vivistim Therapy. If we are unable to successfully market and sell Vivistim Therapy, our business prospects will be materially and adversely affected, and we may be unable to achieve revenue growth and to fund our operations.\n\nTo date, all of our revenue has been derived, and we expect it to continue to be derived, from sales of our Vivistim System. Our future financial success will depend entirely on our ability to effectively and profitably market and sell Vivistim Therapy. The commercial success of Vivistim Therapy and any of our future products we develop will depend on a number of factors, including the following:\n\n•\nour revenue growth;\n\n•\nthe market awareness and adoption of Vivistim Therapy, including by patients and our customers;\n\n•\nthe scope, timing and costs of supporting the growth and expansion of our commercial organization and efforts;\n\n•\nthe availability and amount of reimbursement for procedures using our products;\n\n•\nthe adoption of private payor coverage of our products;\n\n•\nchanges in the acquisition costs of finished goods and components used in our products;\n\n•\nthe costs associated with securing additional suppliers and service providers;\n\n•\nthe timing and costs of our research and development efforts;\n\n•\nthe scope, rate of progress and costs of our current or future clinical and registries as well as costs associated with complying with regulatory requirements;\n\n•\nthe cost and timing of additional regulatory clearances or approvals;\n\n•\nthe costs of attaining, defending, and enforcing our intellectual property rights;\n\n•\nwhether we acquire third-party products or technologies;\n\n•\nlitigation or other claims against us for intellectual property infringement or otherwise;\n\n•\nthe emergence of competing or complementary technologies;\n\n•\nour ability to raise additional funds to finance our operations;\n\n•\ndebt service requirements;\n\n \n\n40\n\n \n\n•\nour need to implement additional infrastructure and internal systems;\n\n•\ngeneral economic, industry and market conditions or extraordinary external events, such as a recession;\n\n•\nthe rate at which we expand internationally;\n\n•\nthe cost associated with being a public company;\n\n•\nour reputation among physicians, hospitals and therapists; and\n\n•\nwhether we are required by the FDA or comparable non-U.S. regulatory authorities to conduct additional clinical trials for future or current indications.\n\nIf we fail to successfully market and sell our products, we will not be able to achieve profitability, which will have a material adverse effect on our business, financial condition and results of operations.\n\nIf we fail to effectively hire, train, and retain our direct sales force, increase our sales capabilities, or develop broad brand awareness in a cost-effective manner, our growth will be materially and adversely affected, and our business will suffer.\n\nWe have a direct sales team with substantial applicable medical device and clinical experience, as well as sales management. In order to generate future growth, we must continue to add highly qualified personnel to our commercial organization, with a strategic mix of TMs and TDSs, to drive further awareness and penetration within healthcare providers that interact with stroke survivors. Identifying and recruiting qualified commercial personnel and training them on our product, applicable federal and state laws and regulations, and on our internal policies and procedures requires significant time, expense, and attention. Once hired, the training process is lengthy because it requires significant education for new TMs and TDSs to achieve the level of clinical competency with our products expected by physicians and therapists. Upon completion of the training, our TMs and TDSs typically require lead time in the field to grow their network of accounts and achieve the productivity levels we expect them to reach in any individual territory. Furthermore, the use of our products may involve limited, non-contractual support activities provided in connection with initial education and setup prior to or at the time of implantation. The Company does not have an ongoing obligation to provide programming, reprogramming, or customer or technical support after implantation, and any such activities, if performed, are incidental and not considered significant. Also, to the extent we hire personnel from our competitors, we may have to wait until applicable non-competition or non-solicitation provisions have expired before deploying such personnel in restricted territories or incur costs to relocate personnel outside of such territories, and we may be subject to future allegations that these new hires have been improperly solicited, or that they have divulged to us proprietary or other confidential information of their former employers. Our business may be harmed if our efforts to expand and train our sales force and any future efforts to engage in direct-to-patient programs and direct-to-consumer marketing do not generate a corresponding increase in revenue, and our higher fixed costs may slow our ability to reduce costs in the face of a sudden decline in demand for our products. Moreover, the members of our direct sales force are at-will employees. The loss of these personnel to competitors or otherwise could have a material adverse effect on our business, financial condition, and results of operations. If we are unable to attract, train and retain our direct sales force personnel or replace them with individuals of equivalent technical expertise and qualifications, if we are unable to successfully instill technical expertise in replacement personnel, or if our direct sales force personnel are unable to reach the productivity levels we expect on the timeline we expect for any reason, our revenue and results of operations could be materially and adversely affected.\n\nThe commercial success of Vivistim Therapy depends upon attaining significant market acceptance of our products by hospitals, healthcare providers, therapists, patients, caregivers and payors.\n\nOur success depends, in part, on the acceptance of Vivistim Therapy as safe, effective and cost-effective. We cannot predict how quickly, if at all, hospitals, healthcare providers, therapists, patients, caregivers or payors will adopt Vivistim Therapy or, if adopted, how frequently Vivistim Therapy will be used. Vivistim Therapy and any future products we may develop or market may never gain broad market acceptance for some or all of our targeted indications. It is important to our success, future growth, and profitability that we are able to increase healthcare provider awareness of Vivistim Therapy and that hospitals, healthcare providers, therapists, patients, caregivers and payors believe that our products offer benefits over alternative treatment methods, and that they adopt our products. These parties may not adopt our products unless they are able to determine, based on experience, clinical data, medical society recommendations, and other analyses, that our products are safe, effective and cost-effective on a stand-alone basis and relative to competitors’ products. If physicians or payors do not find our body of published clinical evidence and data compelling or wish to wait for additional studies, they may choose not to use or provide coverage and reimbursement for or prescribe our product. Currently, there are a number of large third-party payers that have determined that our Vivistim Therapy is experimental or investigational and therefore do not cover it at this time. In addition, the long-term effects of our Vivistim Therapy beyond our current clinical trials are not yet known. Certain physicians, hospitals, therapists and payers may prefer to see longer-term safety and efficacy data than we have produced. Even if we are able to raise awareness, physicians and therapists may be slow in changing their medical treatment practices and may be hesitant to select our products for recommendation to their patients for a variety of reasons, including:\n\n \n\n41\n\n \n\n•\nlong-standing relationships with competing companies and distributors that sell other products;\n\n•\nlack or perceived lack of sufficient clinical evidence, including long-term data, supporting reliability, safety, clinical or economic benefits;\n\n•\nlack of third-party coverage or adequate reimbursement, particularly from private payors;\n\n•\nlack of experience with our products and concerns that we are relatively new to market; and\n\n•\ntime commitment and skill development that may be required to gain familiarity and proficiency with our products and implantation procedures.\n\nStroke survivors interact with a diverse network of care providers, including stroke interventionalists, neurosurgeons, neurologists, physical medicine and rehabilitation physicians, occupational and physical therapists, stroke coordinators and nurses. Each of these providers can play a role in identifying and evaluating potential Vivistim Therapy candidates. We directly engage each of these stakeholders through our field-based commercial team, as well as through specialized events, summits, and conferences. As a result, our success depends, in large part, on effectively marketing Vivistim Therapy to these healthcare providers. We aim to educate these healthcare providers regarding the patient population that would benefit from Vivistim Therapy. Acceptance of Vivistim Therapy depends upon our education of healthcare providers as to the distinctive characteristics, clinical benefits, safety, durability and ease of use of Vivistim Therapy as compared to other therapy options and any future competitor VNS devices and upon our effective communication to healthcare providers of the proper use of Vivistim Therapy as well as our ability to provide effective and timely physician, therapist and patient support, including in connection with device education and addressing any technical, quality or other concerns. However, we cannot assure you that we will achieve broad market acceptance among these practitioners. Healthcare providers may be reluctant or unwilling to invest time to learn about the benefits of Vivistim Therapy, and to deviate from practices or therapy programs which they consider to be more established. If we are not able to effectively demonstrate that the use of Vivistim Therapy is beneficial in a broad range of patients, some healthcare providers may choose to utilize Vivistim Therapy on only a subset of their total eligible patient population or not at all, and adoption of our product will be limited and may not occur as rapidly as we anticipate or at all, which would have a material adverse effect on our business, financial condition and results of operations.\n\nMost of our customers are hospitals, which may require us to enter into contracts regarding our devices. This process can be lengthy and time-consuming and may require extensive negotiations and management time with an uncertain degree of success. If we do not receive access to hospital facilities via these contracting processes or otherwise, or if we are unable to secure contracts or tender successful bids, we may not achieve our sales and revenues goals, and our results of operations may be harmed. Furthermore, we may expend significant effort in these time-consuming processes and still may not obtain a purchase contract from such hospitals.\n\nIn addition, certain characteristics and features of Vivistim Therapy may prevent widespread market adoption. For example, some patients have reported pain, discomfort, bruising, swelling and infection after implantation as well as device related issues, such as low or high impedance (a measure of the lead’s resistance to current), which have led to explant or revision requests. These and any similar future explants or revisions could deter potential candidates from pursuing treatment or prompt physicians to favor alternative therapies. Even if physicians recommend Vivistim Therapy to patients, patients may not adopt it for a variety of reasons, including because they do not want to or are unable to undergo the implantation procedure (which involves typical risks associated with such procedures, including infection), do not perceive our device as safe, effective or cost-effective, prefer any future competitive devices or therapies (including as a result of competitive patient marketing) or because Vivistim Therapy is not reimbursed by their health insurance provider.\n\nAlso, screening patients for Vivistim Therapy requires a clinical assessment of a patient’s motor impairments, which is typically done based on the Fugl-Meyer Assessment of Upper Extremity (FMA-UE) score. The FMA-UE assessment can take about 30 minutes or more to complete, which can be longer than other clinical assessments. Follow-up assessments take about the same time. Healthcare providers that use other clinical assessments that are shorter may not want to learn how to use the FMA-UE scoring system or invest the time in a longer assessment process generally, which may impact adoption of Vivistim Therapy.\n\nAdditionally, even if our products achieve market acceptance, they may not maintain that market acceptance over time if competing products, therapies or technologies are considered safer, more effective, more cost-effective or otherwise superior. Any failure of our products to generate sufficient demand or to achieve meaningful market acceptance and penetration will harm our future prospects and have a material adverse effect on our business, financial condition, and results of operations.\n\nCoverage and adequate reimbursement may not be available or may be subject to change for our Vivistim System, including any future products we commercialize, which could diminish our sales, increase our competition, or affect our ability to sell our currently marketed Vivistim Therapy and any future products profitably.\n\n \n\n42\n\n \n\nOur customers are generally reimbursed by third-party payors for the procedures that are required to implant our device. Because there is no separate reimbursement for supplies used in surgical procedures, including our device, the additional cost associated with the use of our products can affect the profit margin of the hospital where the procedure is performed. Some of our target customers may be unwilling to adopt our products in light of potential additional associated cost. In addition, customers that perform the procedure may be subject to reimbursement claim denials upon submission of the claim. These events, or any other decline in the amount payors are willing to reimburse our customers, could make it difficult for existing customers to continue using or to adopt our products and could create additional pricing pressure for us. If we are forced to lower the price we charge for our products, our gross margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations and impair our ability to grow our business.\n\nBased on our experience to date, third-party payors generally reimburse for the surgical procedures in which our products are used only if the patient meets the established medical necessity criteria for surgery. Some payors are moving toward a managed care system and control their healthcare costs by limiting authorizations for surgical procedures, including elective procedures using our devices. Although no uniform policy of coverage and reimbursement among payors exists and coverage and reimbursement for procedures can differ significantly from payor to payor, reimbursement decisions by particular third-party payors may depend upon a number of factors, including the payor’s determination that use of a product is:\n\n•\na covered benefit under its health plan;\n\n•\nappropriate and medically necessary for the specific indication;\n\n•\ncost effective; and\n\n•\nneither experimental nor investigational.\n\nThird-party payors are increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using inappropriate modifiers, or billing for inappropriate care settings. Some third-party payors must approve coverage for new or innovative devices or procedures before they will reimburse healthcare providers who use the products or therapies. Even though a new product may have been cleared for commercial distribution by the FDA, we may find limited demand for the product unless and until reimbursement approval has been obtained from governmental and private third-party payors.\n\nMedicare, which is administered by the Centers for Medicare and Medicaid Services (CMS), does not currently have a national coverage determination or local coverage determinations applicable to our device. As a result, coverage determinations are made on a case-by-case basis for Medicare beneficiaries. Medicaid programs are funded by both federal and state governments, and coverage and reimbursement policies vary from state to state and from year to year. Effective July 1, 2023, the New York State Medicaid fee-for-service program covers FDA-cleared vagus nerve stimulator, or VNS, devices used for stroke therapy in conjunction with rehabilitation to recover function in hands and arms after an ischemic stroke. Most commercial payors currently consider Vivistim Therapy as experimental or investigational and require prior authorization.\n\nObtaining and maintaining coverage and reimbursement can be a time-consuming and expensive process. For example, payors typically require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products before providing coverage. We may not be able to provide data sufficient to satisfy third-party payors that procedures using our products should be covered and reimbursed, and even if we are, such data may be time-consuming and costly to obtain and the incremental revenue from the positive coverage decisions it generates (if any) may not be sufficient to recoup the expense associated with data collection. Payors also continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures. While some payors currently cover and provide reimbursement for procedures using our currently cleared or approved products on a case-by-case basis, we can give no assurance that these third-party payors will continue to provide coverage and adequate reimbursement for the procedures using our products, or that additional third-party payors will provide coverage for our products in the future. If we are not successful in reversing any non-coverage policies, or if third-party payors that currently cover or reimburse procedures in which our products are used reverse or limit their coverage in the future, or if other third-party payors issue similar non-coverage policies, this could have a material adverse effect on our business.\n\nThird-party payors are also increasingly examining the cost effectiveness of products, in addition to their safety and efficacy, when making coverage and payment decisions. Third-party payors have instituted initiatives to limit the growth of healthcare costs using, for example, price regulation or controls and competitive pricing programs. Some third-party payors also require demonstrated superiority, on the basis of randomized clinical trials, or pre-approval of coverage, for new or innovative devices or procedures before they will reimburse healthcare providers who use such devices or procedures. It is uncertain whether our current products or any future products will be viewed as sufficiently cost effective by payors to warrant coverage and adequate reimbursement levels for procedures using such products in any given jurisdiction. For example, there can be no assurance that payors will find Vivistim\n\n \n\n43\n\n \n\nTherapy attractive from a cost/benefit perspective, or that they will deem our data on economic benefits of Vivistim Therapy sufficiently persuasive.\n\nHigh rates of coverage denials or prolonged, burdensome prior authorization processes by commercial and government payors may discourage physicians from recommending Vivistim Therapy to their patients. Certain of our customers have, from time to time, experienced coverage denials and extended prior authorization requirements for Vivistim Therapy, and there can be no assurance that payor behavior will improve or that such denials will not persist or increase in the future. If medical centers and physicians perceive that reimbursement is uncertain or routinely denied, they may be less willing to invest the time required to pursue appeals or recommend Vivistim Therapy to their patients, which could reduce utilization of Vivistim Therapy. Persistent denial trends could also influence hospital committees and practice groups to deprioritize Vivistim Therapy in their care protocols, further limiting adoption and adversely affecting our revenue, reputation and growth prospects.\n\nIn addition, government payors, such as CMS, have increased their efforts to control the cost, utilization and delivery of healthcare services. CMS establishes Medicare payment levels for hospitals and physicians on an annual basis, which can increase or decrease payment to such entities. The Vivistim System is typically implanted in the hospital outpatient setting, and all items and services paid under the Medicare hospital outpatient prospective payment system, or OPPS, are assigned to payment groups called Ambulatory Payment Classifications, or APCs, which group together items and services that are similar clinically and in terms of resource use. Reimbursement for professional services performed by physicians are reported using CPT codes and based on a different payment methodology. Implantation of the Vivistim System falls under CPT Code 64568 (“Incision for implantation of a cranial nerve (e.g., vagus) neurostimulator electrode array and pulse generator”). From January 1, 2023 through December 31, 2025, CMS granted transitional pass-through payment status for the Vivistim System under HCPCS code C1827 (“Generator, neurostimulator (implantable), non-rechargeable, with implantable stimulation lead and external paired stimulation controller”) when used in combination with CPT code 64568. This status is granted by CMS to facilitate access to innovative devices that significantly improves clinical outcomes as compared to currently available treatment options. Effective January 1, 2026, CPT code 64568 is assigned to New Technology APC 1580. A service is not paid under a New Technology APC until sufficient claims data have been collected to allow CMS to assign the procedure to a clinical APC group that is appropriate in clinical and resource terms. CMS generally expects this to occur within two to three years. We cannot provide any assurances that CPT code 64568 will continue to be assigned to APC 1580 during this time, or that reimbursement amount associated with any subsequent assignment to a clinical APC group will be adequate to cover the costs associated with our device. Individual states may also enact legislation that impacts Medicaid payments to hospitals and physicians.\n\nThe marketability of our products may suffer if government and commercial third-party payors fail to provide adequate coverage and reimbursement. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future.\n\nWe depend on a small number of third-party contract manufacturers and suppliers, some of which are single source, to produce and package all elements comprising our Vivistim System as well as certain implantation tools, and if these suppliers and manufacturers fail to supply our Vivistim System or its components or subcomponents in sufficient quantities or at all, it will have a material adverse effect on our business, financial condition, and results of operations.\n\nWe utilize a small number of qualified medical device contract manufacturers and suppliers, some of which are single source, to produce and package all elements comprising our Vivistim System as well as certain implantation tools. In certain cases, these third parties also perform design engineering activities for specific components. We generally do not have long-term contracts with our suppliers, and our supply arrangements generally do not include minimum manufacturing or purchase obligations. For these arrangements, we primarily order products through the use of purchase orders, do not have any obligation to purchase any given quantity of products, and our suppliers generally have no obligation to sell to us or to manufacture for us any given quantity of our products or components of our systems. Certain supplier arrangements include non-cancelable purchase commitments and binding forecast obligations. For these arrangements, we primarily order products through the use of purchase orders that are generally non-cancelable once accepted by the respective supplier. Although we continue to fortify our supply chain by seeking additional sourcing channels, all of the critical components of the Vivistim System, including the IPG and lead, are supplied to us from single sources that are qualified medical device contract manufacturers and suppliers. Our lead is manufactured by Cirtec Medical. Our IPG is manufactured by Integer Holdings Corporation (Integer).\n\nWe entered into supply agreements with Integer pursuant to which Integer agreed to manufacture our IPG component for us. Our first supply agreement with Integer provides that we may order from Integer on a non-exclusive, purchase order basis with no minimum purchase requirements. The agreement includes, among other provisions, customary representations and warranties by the parties, ordering and payment and shipping terms, customary provisions with respect to the ownership of any intellectual property and customary confidentiality provisions. The agreement continues until termination by the parties. Either party may terminate the\n\n \n\n44\n\n \n\nagreement upon written notice in the event of a material breach that is not cured within 30 days of the other party’s written notice of such breach; upon bankruptcy, insolvency or reorganization that has not been dismissed within 30 days after commencement; or in the event that the other party commits a crime, intentionally imparts material information or misappropriates intellectual property. In addition, we may terminate the agreement if Integer fails to meet our specifications or is unable to manufacture products, or for our convenience if we are current in our payment obligations to Integer. To further support our anticipated growth and IPG supply needs, we also entered into a second supply agreement (the IPG Supply Agreement), effective September 24, 2024, with Greatbatch Ltd., a subsidiary of Integer. The IPG Supply Agreement contains, among other provisions, customary representations and warranties by the parties, ordering and payment and shipping terms, customary provisions with respect to the ownership of any intellectual property created during the term of the IPG Supply Agreement, certain indemnification rights in favor of both parties, limitations of liability and customary confidentiality provisions, and minimum purchase requirements. The minimum purchase requirements are expected to commence in 2028. Under the minimum purchase requirements, we are obligated to purchase a high double-digit fixed percentage of our IPG supply requirements from Integer and must purchase a minimum number of IPGs from Integer per year. The aggregate minimum purchase obligation for the initial five-year period is approximately $5.8 million. The IPG Supply Agreement has an initial five-year term commencing upon the first commercial shipment of product, and will automatically renew for one-year periods unless either party delivers a notice of non-renewal prior to the renewal date. Either party may terminate the IPG Supply Agreement upon written notice in the event of a material breach of the IPG Supply Agreement that is not cured within 60 days of the other party’s written notice of such breach, subject to certain conditions; or upon bankruptcy, insolvency or reorganization that has not been dismissed within 60 days after commencement. We may terminate the IPG Supply Agreement if Integer fails to adequately supply non-defective products, if the products are subject to repeating failures over time that fail to meet our specifications, or if Integer is unable to manufacture products for a specified period of time.\n\nWhere we rely on a single-source supplier, alternative second-source suppliers may not be readily available or qualifying them may take significant time and expense. The level of inventory we maintain for certain of our sole-sourced supplies may not be sufficient to support our customer demand for the length of time that may be required to qualify an alternative supplier should this become necessary. We seek to strategically maintain sufficient levels of inventory to help mitigate supply disruption, to accommodate varying demand mix and to achieve more efficient volume-based pricing on our components; however, we may not be accurate in our estimates which could result in insufficient inventory to meet demand or excess inventory and the risk of inventory obsolescence and expiration. If our estimates result in carrying insufficient levels of inventory to meet customer demand, this may lead to customer backorders due to a lack of manufacturing capacity or supply chain challenges, which could result in delays or inability to reach sales potential, cause reputational harm or otherwise have a material adverse effect on our business, financial condition and results of operations.\n\nWhere these third parties perform design engineering work, we are additionally reliant on their design engineering capacities and proprietary know-how, and we may have reduced visibility and control over design decisions and related changes. This reliance can increase the time and cost to implement, validate and transfer design changes, complicate second-sourcing efforts, and heighten the risk of disputes over intellectual property ownership, licensing scope, and access to design files and documentation necessary to manufacture and support our device.\n\nOur suppliers may encounter problems during manufacturing for a variety of reasons, including, for example, failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements. Our reliance on a third-party manufacturer and third-party suppliers also subjects us to other risks that could harm our business that we would not be subject to if we manufactured products ourselves, including:\n\n•\nwe may not be a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours;\n\n•\nthird parties may threaten or enforce their intellectual property rights against our suppliers, which may cause disruptions or delays in shipment, or may force our suppliers to cease conducting business with us;\n\n•\nour suppliers, especially new suppliers, may make errors in manufacturing that could negatively affect the efficacy or safety of Vivistim Therapy or cause delays in shipment or product recalls;\n\n•\nwe may have difficulty locating and qualifying alternative suppliers;\n\n•\nthe capacity, technical capabilities and qualifications of our suppliers may not expand in line with our future volume requirements or support the manufacture of new products on our desired schedule, or at all;\n\n•\nswitching components or suppliers may require product redesign and possibly submission to FDA or other regulatory bodies, which could significantly impede or delay our commercial activities;\n\n \n\n45\n\n \n\n•\none or more of our single-source suppliers may be unwilling or unable to supply components of our Vivistim System;\n\n•\nother customers may use fair or unfair negotiation tactics or pressures to impede our use of the suppliers;\n\n•\nthe occurrence of a fire, natural or man-made disaster or other catastrophe impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner or at all;\n\n•\nour suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements;\n\n•\nour suppliers may not maintain the confidentiality of our confidential information; and\n\n•\nhigher manufacturing and product costs than more vertically integrated companies.\n\nAny of these factors could cause delays or suspension of commercialization and marketing, clinical trials, regulatory submissions or required approvals, cause us to incur higher costs, inability to meet customer demand, and product quality issues or recalls. Furthermore, if our contract manufacturers fail to deliver the required commercial quantities of finished products of an acceptable quality on a timely basis and at commercially reasonable prices and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we would likely be unable to meet demand for our products and we would lose potential revenue. Any difficulties in locating and hiring third-party manufacturers, or in the ability of third-party manufacturers to supply quantities of our products at the times and in the quantities we need, could have a material adverse effect on our business. It may take a significant amount of time and resources (including costs) to establish an alternative source of supply for our products and to have any such new source approved by the FDA. Given our reliance on certain single-source suppliers, we are especially susceptible to supply shortages because we do not have alternate suppliers currently available, which can result in increased costs and production delays and potentially adversely impact our ability to meet demand for our products in a timely manner or at all.\n\nMoreover, some third parties or their facilities are or may in the future be located in markets subject to political, social and economic risk, corruption, infrastructure problems, tariffs and natural or man-made disasters, in addition to country-specific intellectual property protection, privacy and data security and tax risks and the risk of nationalization and expropriation, given current legal and regulatory environments. Failure of third parties to meet their contractual, regulatory, and other obligations may have a material adverse effect on our business, financial condition and results of operations. Because we rely on some suppliers in countries outside of the United States, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies of the United States or the governments in the countries these suppliers are located, including changes in tariff policies, political or social unrest, or unstable economic conditions. Any of these matters could materially and adversely affect our business, financial condition and results of operations.\n\nThe size of our market opportunity has not been established with precision and may be smaller than we estimate, possibly materially.\n\nWe estimate that there are more than 4 million chronic ischemic stroke survivors living with moderate to severe upper extremity impairment in the United States and that are within the current on-label indication for our Vivistim System. We believe that an initial market opportunity comprises approximately 1 million of those survivors, which equates to an initial market opportunity of over $30 billion based on the average selling price of the Vivistim System. This initial market represents the total overall revenue opportunity that we believe is available if we achieve 100% market share for Vivistim Therapy among these survivors, and is not a representation that we will achieve any such market share. The market share we achieve is subject to a number of assumptions, risks and uncertainties, including our ability to execute on our commercial strategy and the extent of adoption of Vivistim Therapy. Further, these estimates are based on a number of internal and third-party estimates which may prove to be inaccurate. The actual size of our addressable markets may be smaller than our estimates for a number of reasons. The Vivistim System is currently the first and only FDA-approved solution for chronic ischemic stroke survivors with moderate to severe upper extremity impairment. As such, we will have to expend significant resources to educate and promote awareness of this solution among patients, caregivers and healthcare providers. If we are not able to successfully drive adoption of our solution, we may not be able to access a significant part of this estimated market opportunity.\n\nOur Vivistim System implantation procedure falls under Category 1 CPT code. Medicare fee-for-service patients can typically access Vivistim Therapy when medically necessary, without prior authorization. Commercial insurance, Medicaid and Medicare Advantage generally require prior authorization. As such, commercial insurance coverage represents the largest gap in coverage and continues to evolve, and may never become widely available. Medicare reimbursement rates may also be reduced. The foregoing may slow or prevent broad adoption of our solution or require us to reduce our average selling prices to accommodate reduced reimbursement rates. We have determined our serviceable addressable market using an assumed average selling price for our Vivistim System. A decrease or increase in our assumed average selling price would change our serviceable addressable market.\n\n \n\n46\n\n \n\nAdditionally, the market for our solution may be slow to develop as a result of physician concerns associated with Vivistim Therapy due to the limited long term clinical data, limited or challenges regarding commercial reimbursement, and limited network of referral sources that may take some time to develop, if they develop at all. In order to generate future growth, we are building out a dedicated group of field-based TMs and TDSs focused on developing our market, including driving awareness of Vivistim Therapy and its clinical benefits as well as supporting VNS-specific professional education, but our efforts to do so may not be successful. Moreover, our total market opportunity could decrease if preventive therapies, drugs or devices that broadly reduce stroke incidence (such as glucagon-like peptide agonists, or GLP-1 drugs, if proved to be effective for such purpose) are prescribed or utilized more widely or if stroke incidence generally decreases due to, among other reasons, the population in the United States becoming healthier or new drugs being developed.\n\nAny of the foregoing could cause our total addressable market and serviceable addressable market to be lower than we currently estimate. If our market does not continue to develop at the rate we expect, our business, financial condition, and results of operations could be materially and adversely affected.\n\nAdverse events, product recalls, or other complications or customer satisfaction issues associated with Vivistim Therapy, including regarding the finite IPG battery life, could limit its adoption.\n\nRisks of using our products include risks that are common to any surgical procedure. Adverse events that have been experienced in connection with our device in clinical trials and clinical practice include infection, pain and discomfort, migration of the implanted device, irritation, bruising, swelling and non-healing wounds. Certain of these procedure or device related adverse events have, in some cases, required device explantations or revisions; in some of these cases, patients have not been re-implanted. Complications or adverse events could result from improper implantation and lack of adequate physician experience or training with our products as well as other user errors, pre-existing patient conditions or anatomical factors and manufacturing defects.\n\nIn addition, since the IPG battery is indicated for approximately five years of service life under continuous use conditions, long-term use past five years have in the past, and may in the future, require one or more replacement procedures when the IPG battery reaches its end-of-life. Replacement of the IPG necessarily involves surgical intervention (such as explant or replacement) and is subject to the risk of additional adverse reactions, including infection, pain and discomfort, irritation, bruising, swelling, non-healing wounds and adverse reactions to general anesthesia. The prospect of having to eventually explant or replace our Vivistim System, which would involve additional surgery and its associated risks (which may be heightened at the more advanced age of any such explant or replacement procedure), may dissuade patients from using Vivistim Therapy in the first instance.\n\nIn addition to the adverse events described above, users have in the past experienced, and may in the future experience, issues with the SAPS interface and accessories and their interactions with the IPG, and we have received, and may in the future receive, complaints regarding these issues. These issues have included SAPS screen anomalies and connection errors between the SAPS user interface and the wireless transmitter, which are typically resolved by rebooting SAPS or replacing the respective laptop, and connection issues between the wireless transmitter and the IPG, which are typically resolved by reconnecting or repositioning the wireless transmitter. Our device manual includes detailed instructions regarding how to resolve these issues, and a team of field-based clinical engineers are available to provide remote and in-person support to clinicians and therapists. While these issues have not been material or presented significant risks or issues for our business to date, if any such issues become systemic, persist, or we are unable to remediate them promptly, or if they otherwise inconvenience or frustrate users, they could impair device performance, disrupt therapy, necessitate replacement procedures, dissuade patients and physicians from using Vivistim Therapy and damage our reputation. Customers may attribute these or similar issues to our products even if caused by reasons not directly related to our products, such as pre-existing conditions, complications associated with the surgical procedure or related anesthesia itself, implantation of the device too deep in the tissue, making a larger-than-necessary incision that results in device migration, movement in the body or other types of user error or patient anatomical features. Even if these types of events are not directly attributable to the devices, they could decrease acceptance of our products by our customers, including hospitals, physicians, therapists, patients or caregivers, and result in a material adverse effect on our business, financial condition, and results of operations. Our reputation among our current or potential customers and referral sources, including but not limited to, stroke interventionalists, neurosurgeons, neurologists, physical medicine and rehabilitation physicians, occupational and physical therapists, stroke coordinators and nurses could also be materially and adversely affected by safety or customer satisfaction issues involving us or our products. For example, our customer service and clinical representatives may be unable to, or be perceived to be unable to, provide technical and customer service support effectively and in a timely manner or at all. These or other customer satisfaction issues, in addition to any product recalls or other safety or efficacy issues, could materially and adversely affect our reputation and our ability to establish or maintain broad adoption of our products, which would harm our future prospects and have a material adverse effect on our business, financial condition, and results of operations. Additionally, any unfavorable publicity or news coverage regarding our Vivistim System, whether or not accurate, may dissuade patients from using our Vivistim System.\n\n \n\n47\n\n \n\nScreening procedures designed to identify patients who are contraindicated for use of Vivistim Therapy may be inconsistently or incorrectly applied by healthcare providers or may otherwise fail to identify individuals who should not have been eligible for Vivistim Therapy, resulting in customer dissatisfaction by such patients. Also, hospitals and physicians may not prescribe our products due to potential interference or complications with other medical procedures. For example, because our products include implantation of certain medical-grade metals, our labeling our Vivistim System is designated as MR Conditional and includes specific considerations for procedures using magnetic resonance imaging, or MRI. Any of these events could materially and adversely affect our ability to commercialize our products and to compete with other products in stroke recovery.\n\nWe operate in a competitive industry that is subject to technological change and significantly affected by new product introductions and market activities of other industry participants.\n\nWe operate in a competitive industry that is subject to technological change and significantly affected by new product introductions and market activities of other industry participants. For example, industry participants include medical device manufacturers and robotics companies, including a significant number of companies focused on stroke prevention and acute stroke care. To the extent these companies decide to focus on longer term stroke care, particularly in the chronic phase, we may face increased competition. Many of these companies have longer, more established operating histories, and significantly greater name recognition and financial, technical, marketing, sales, distribution and other resources. In addition, certain companies have several competitive advantages, including significant scale and established relationships with healthcare providers and third-party payors. Irrespective of their current focus, we also compete with these companies for personnel, including qualified personnel that are necessary to grow our business, including TMs and TDSs.\n\nCompetitors may be able to offer products similar or superior to ours, including products that may, or may be perceived to, have improved features, such as smaller form factors, improved ease of use, longer battery life or rechargeable battery, aesthetics, reliability, safety and effectiveness; have improved reimbursement; be better supported by clinical evidence; more widely recognized and adopted by healthcare providers and patients; or be more cost-efficient. For example, competitors may utilize existing or newly developed products to enter the VNS market in the future, which would increase our competition and could materially and adversely affect demand for Vivistim Therapy. Increased competition may result in price reductions, reduced gross margins and loss of market share. To the extent we expand internationally, we will face additional competition in geographies outside the United States. In addition, we face competition from pharmaceutical companies that produce drugs which aim to aid in stroke recovery, and other companies that produce other devices or therapies that aim to assist in stroke recovery. Further, if medical research were to lead to the discovery of alternative therapies or technologies that address chronic stroke impairments in a way that is or is perceived to be more accurate, reliable, cost-effective, or otherwise improved relative to Vivistim Therapy, for example through alternative monitoring or testing technologies, medication, or therapies, the demand for our products could decrease significantly. For example, some of our patients have experienced pain and discomfort associated with the surgical implantation of our product, and some prospective patients have been reluctant to undergo surgery; if competitors develop or commercialize minimally invasive or non-surgical alternatives that avoid implantation, patients and providers may prefer those options over Vivistim Therapy, which could further reduce demand for our products. There can be no assurance that we will be able to compete successfully against our current or future competitors, or that competitive pressures will not have a material adverse effect on our business, financial condition and results of operations.\n\nIn addition, many medical device companies are consolidating to create new companies with greater market power. As the medical device industry consolidates, competition to provide goods and services to industry participants will become more intense. These industry participants may try to use their market power to negotiate price concessions or reductions for our products. If we reduce our prices because of consolidation in the healthcare industry, our revenue would decrease, which could have a material adverse effect on our business, financial condition, and results of operations.\n\nIf rising prices or limited availability of raw materials continues to persist, our business and results of operations may be adversely affected.\n\nVolatility in raw material prices and availability can occur due to numerous factors beyond our control, including general, domestic, and international economic conditions, labor costs, production levels, competition, consumer demand, import duties, tariffs and taxes, inflation and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials that our suppliers purchase and are ultimately used in our systems, and may therefore have a material adverse effect on our business, financial condition and results of operations.\n\nIn addition, the current U.S. administration has expressed strong concerns about imports from countries that it perceives as engaging in unfair trade practices, and has imposed tariffs or other restrictions on products, components or raw materials sourced from those countries. The legal basis for some of these tariffs have been challenged, and recent judicial decisions, including from the U.S. Supreme Court, have invalidated or called into question certain tariff measures. However, other tariffs remain in place, new or\n\n \n\n48\n\n \n\nadditional tariffs have been and may continue to be imposed, and the overall trade policy environment remains fluid and subject to rapid change. Moreover, changes in U.S. trade policy have triggered and may in the future trigger retaliatory actions, countermeasures, or trade restrictions by affected countries. For example, there have been and continue to be further indications that there may be an increase in tariff rates on various types of goods imported from Canada, Mexico, South America and Europe that could apply to the raw materials we require in our products, including certain types of metal powders used for coating our products as well as entire components of our Vivistim System. In the event that any such possible tariff increases remain in place or become enacted in the future, they could significantly increase the cost of materials and components that our suppliers import and use in our systems, which in turn could increase our supply costs. At this time, there can be no assurance that we will be able to pass any portion of such increases on to customers. We currently do not hedge against our exposure to changing raw material prices and are not aware as to whether our suppliers hedge. As a result, fluctuations in raw material prices could have a material adverse effect on our business, results of operations and financial condition. Supply shortages or changes in availability for any particular type of raw material can delay supplier volume and production capabilities or cause increases in the cost of manufacturing our products. We may be materially and adversely affected by changes in availability and pricing of raw materials, which could materially and adversely affect our results of operations.\n\nIn order to support our continued operations and the growth of our business, we may seek to raise additional capital, which may not be available to us on acceptable terms, or at all.\n\nWe expect our operating expenses to continue to increase for the foreseeable future as we continue to make significant investments in our commercial organization; seek to expand our marketing programs to help facilitate further awareness and adoption among healthcare providers and patients; seek payor reimbursement; continue to make investments in research and development, regulatory affairs, and clinical trials to develop future generations of products based on Vivistim Therapy, support regulatory submissions, and demonstrate the clinical efficacy of our products; and as we continue to scale the business infrastructure and manufacturing capacity. Moreover, we expect to incur additional expenses associated with operating as a public company, including legal, accounting, insurance, exchange listing and SEC compliance, investor relations, and other expenses. In addition, we may in the future seek to acquire or invest in, additional businesses, products, or technologies that we believe could complement or expand our portfolio, enhance our technical capabilities, or otherwise offer growth opportunities.\n\nAs of March 31, 2026, we had $55.7 million in cash and cash equivalents. After giving effect to the net proceeds from our IPO, we believe that our cash and cash equivalents will be sufficient to fund our planned operating expenses for at least the next 12 months from the date of this Quarterly Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.\n\nBecause of these and other factors, we expect to continue to incur substantial net losses and negative cash flows from operations for at least the next several years. Our future liquidity and capital funding requirements will depend on numerous factors, including:\n\n•\nour revenue growth;\n\n•\nthe market awareness and adoption of our Vivistim System, including by our customers and their patients, and the extent to which we are able to successfully educate patients and customers about our current and future indications, and the benefits of our Vivistim Therapy in treating such conditions;\n\n•\nour ability to expand our sales, marketing, and distribution capabilities in a timely and cost efficient manner, or at all;\n\n•\nthe availability and amount of reimbursement for procedures using our products;\n\n•\nthe new adoption and continued acceptance of private payor coverage of Vivistim Therapy;\n\n•\nthe emergence of competing, complementary or alternative technologies or therapies, including from other VNS neurostimulation device manufacturers or other stroke rehabilitation alternatives;\n\n•\nthe timing and extent of our research and development efforts;\n\n•\nour ability to sustain meaningful clinical benefits for our patients;\n\n•\nour ability to retain our current employees and the need and ability to hire additional management, sales, scientific, and clinical personnel;\n\n•\nour need to implement additional infrastructure and internal systems;\n\n•\nour ability to raise additional funds to finance our operations;\n\n•\ngeneral economic, industry and market conditions or extraordinary external events, such as a recession;\n\n \n\n49\n\n \n\n•\nthe timing and success or failure of clinical trials or post-approval studies for our products or competing products;\n\n•\nlitigation or other claims against us for intellectual property infringement or otherwise; and\n\n•\nour ability to hire additional personnel and undertake initiatives to support our operations as a public company.\n\nTo the extent that we need additional capital to continue to fund our operations, we intend to obtain such capital through public or private equity offerings or debt financings, credit or loan facilities, or a combination of one or more of these funding sources. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. In the case of an insolvency, debt holders would be repaid before holders of our equity securities receive any distribution of our corporate assets. Any debt financing or additional equity that we raise may also contain terms that are not favorable to us or our stockholders. If we raise additional funds through licensing or collaboration arrangements with third parties, we may have to relinquish valuable rights to our current or future product candidates, or grant licenses on terms that are not favorable to us. We may also seek additional financing opportunistically. We may be unable to raise additional funds on favorable terms, or at all.\n\nVolatility in the capital markets and general economic conditions may be a significant obstacle to raising the required funds. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from factors that include but are not limited to, tariffs, trade and socioeconomic tensions, inflation, the conflict between Russia and Ukraine and in the Middle East, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise sufficient capital on acceptable terms, or at all, our ability to finance our planned operations and support business growth, our business, financial condition and results of operations will be materially and adversely affected.\n\nWe have limited clinical data, evidence and experience regarding the safety and efficacy of Vivistim Therapy.\n\nClinical testing is difficult to design and implement, can take many years, can be expensive, and carries uncertain outcomes. Because Vivistim Therapy is relatively new in the treatment of upper extremity impairment for chronic stroke survivors, we have performed clinical trials only with limited patient populations relevant to our FDA-approved indication. The trials conducted to date have involved relatively small sample sizes, which may limit the statistical power of the findings and the precision of estimated treatment effects. For example, the largest population we studied was 108 participants in our pivotal REHAB trial. As a result, there is uncertainty as to whether the observed safety, efficacy and other outcomes will be applicable across broader patient populations and other, different sub-groups, including for variations in age, sex, race and ethnicity. The effects of using Vivistim Therapy in a large number of patients have not been studied extensively or over a long-term period, and the results of short-term clinical use of such products do not necessarily predict long-term clinical benefits or reveal long-term adverse effects. While we have one year efficacy data from our pivotal REHAB trial and three year efficacy data from our pilot trial, these results were based on a small number of participants of 74 and 14, respectively. Moreover, clinical benefits may not persist in various circumstances, including if the patient discontinues or pauses occupational or physical therapy, does not otherwise adhere to the prescribed treatment regimen, or experiences an intervening medical or functional setback, and we have not studied the durability of effect in these scenarios.\n\nAfter patients complete their initial in-clinic therapy protocol, they are expected to continue Vivistim Therapy at home with functional movements for at least 90 days. At-home Vivistim Therapy sessions last thirty minutes and follow the same principles as the in-clinic therapy. Patients who do not use the device as directed, such as not turning the device on during such sessions, or who fail to engage in the recommended task-specific therapy with the appropriate frequency or at all, may experience limited or no improvement from the completion of the in-clinic therapy, may be dissatisfied with their outcomes, and may attribute such poor results to Vivistim Therapy. We have no clinical data that indicates whether functional gains from the in-clinic therapy would be reversed if patients do not complete the home therapy sessions properly or sufficiently. As such, it is possible that patient noncompliance could lead to reversal of the functional gains during in-clinic therapy. Negative patient experiences – whether due to misuse, noncompliance, or unrealistic expectations – could reduce physician and patient acceptance, harm our reputation, and adversely affect demand.\n\nIn addition, the clinical outcomes supporting Vivistim Therapy have primarily been evaluated using the FMA-UE and the Wolf Motor Function Test (WMFT). Clinicians and therapists who rely on different outcome measures or standards may view our trial results as less relevant or may not accept these endpoints, and patients implanted with our device who are treated in settings that emphasize alternative scoring systems may not experience similar levels of observed benefits. Variability in accepted assessment\n\n \n\n50\n\n \n\nmethodologies among physicians and therapists could reduce the perceived effectiveness of, and limit adoption of Vivistim Therapy, which could have a material adverse effect on our business, financial condition and results of operations.\n\nThe results of preclinical trials and clinical trials of our product conducted to date and ongoing or future trials of our current or future products may not be predictive of the results of later clinical trials, and interim results of a clinical trial do not necessarily predict final results, because they may include assumptions, calculations and conclusions that may prove to be inaccurate and because we may not have received or had the opportunity to fully and carefully evaluate all data. Data and results from our clinical trials do not ensure that we will achieve similar results in future clinical trials in other patient populations, indications or in the commercial use of our products. In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in preclinical trials and earlier clinical trials have nonetheless failed to replicate results in later clinical trials and subsequently failed to obtain marketing approval or commercial acceptance. Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through non-clinical trials and earlier clinical trials. We incur substantial expenses for, and devote significant time to, clinical trials but cannot be certain that the trials will continue to support positive commercial payor reimbursement coverage or result in commercial revenue. Failure can occur at any stage of clinical testing. Our clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.\n\nOur quarterly and annual results may fluctuate significantly and may not fully reflect the underlying performance of our business.\n\nOur quarterly and annual results of operations, including our revenue, profitability, and cash flow, may vary significantly in the future, and period-to-period comparisons of our results of operations may not be meaningful. Accordingly, the results of any one quarter or other period should not be relied upon as an indication of future performance. Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control and, as a result, may not fully reflect the underlying performance of our business. Factors that may cause fluctuations in our quarterly and annual results include, without limitation:\n\n•\nthe level of demand for our products, which may vary significantly from period to period;\n\n•\nthe rate at which we grow our sales force and the speed at which newly hired TMs and TDSs become effective, and the cost and level of investment therein;\n\n•\nexpenditures that we may incur to acquire, develop, or commercialize additional products and technologies;\n\n•\nthe degree of competition in our industry and any change in the competitive landscape of our industry;\n\n•\nthe timing and cost of obtaining regulatory approvals or clearances for future products;\n\n•\ncoverage and reimbursement policies with respect to the procedures using our products and potential future products that compete with our products;\n\n•\nthe timing and success or failure of clinical trials for our current or future products or any future products we develop or competing products;\n\n•\nthe timing and cost of, and level of investment in, research, development, regulatory approval, and commercialization activities relating to our products, which may change from time to time;\n\n•\nthe timing of customer orders or medical procedures, the number of available selling days in a particular period, which can be impacted by a number of factors, such as holidays or days of severe inclement weather in a particular geography, the mix of products sold, and the geographic mix of where products are sold;\n\n•\ntiming and adequacy of supply chain to meet demand;\n\n•\nnatural or man-made disasters, outbreaks of disease or public health crises;\n\n•\nthe timing and nature of any future acquisitions or strategic partnerships; and\n\n•\nfuture accounting pronouncements or changes in our accounting policies.\n\nBecause our quarterly and annual results may fluctuate, period-to-period comparisons may not be the best indication of the underlying results of our business and should only be relied upon as one factor in determining how our business is performing.\n\nIn addition, this variability and unpredictability could result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, it may result in a decrease in the price of our common stock.\n\n \n\n51\n\n \n\nIf our clinical trials are unsuccessful or significantly delayed, or if we do not complete our clinical trials, our business may be materially and adversely affected.\n\nWe are currently engaged in ongoing clinical trials of Vivistim Therapy and we may pursue other clinical trials in the future. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory authorization to commence a trial, in reaching an agreement on acceptable clinical trial terms with prospective sites, in obtaining institutional review board approval at each site, in recruiting patients to participate in a trial, or in obtaining sufficient supplies of clinical trial materials. We cannot provide any assurance that we will successfully, or in a timely manner, enroll our clinical trials, that our clinical trials will meet their primary endpoints, or that such trials or their results will be accepted by the FDA or foreign regulatory authorities or lead to more positive reimbursement coverage decisions from commercial payors.\n\nThe initiation and completion of any clinical trials may be prevented, delayed, or halted, or the integrity of data collected may be compromised, for numerous reasons. We may experience delays in our ongoing clinical trials for a number of reasons, which could adversely affect the costs, timing, or successful completion of our clinical trials, including new indications for our existing product, including:\n\n•\nwe may be required to submit an Investigational Device Exemption (IDE) application to FDA, which must become effective prior to commencing certain human clinical trials of medical devices, and FDA may reject our IDE application and notify us that we may not begin clinical trials;\n\n•\nregulators and other comparable foreign regulatory authorities may disagree as to the design or conduct of our clinical trials;\n\n•\nregulators or institutional review boards (IRBs) or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site;\n\n•\nthe number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower than we anticipate, or we may experience high screen failure rates in our clinical trials, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate, each resulting in significant delays;\n\n•\nour third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may fail to comply with our clinical trial, consent or screening protocols;\n\n•\nour clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical or preclinical testing which may be expensive and time-consuming;\n\n•\ntrial results may not meet the level of statistical significance required by the FDA, other regulatory authorities, or payors;\n\n•\nthe FDA or similar foreign regulatory authorities may find the product is not sufficiently safe for investigational use in humans;\n\n•\nthe FDA or similar foreign regulatory authorities may interpret data from preclinical testing and clinical trials in different ways than we do;\n\n•\nthere may be delays or failure in obtaining approval of our clinical trial protocols from the FDA or other regulatory authorities;\n\n•\nwe may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB or regulatory authorities for re-examination;\n\n•\nthe FDA or similar foreign regulatory authorities may find our or our suppliers’ manufacturing processes or facilities unsatisfactory;\n\n•\nthe FDA or similar foreign regulatory authorities may change their review policies or adopt new regulations that may negatively affect or delay our ability to bring a product to market or receive approvals or clearances to treat new indications;\n\n•\nclinical sites may not adhere to our clinical protocol or may drop out of a clinical trial;\n\n•\nwe may have trouble finding patients to enroll in our trials;\n\n•\nwe, or regulators, may suspend or terminate our clinical trials because the participating patients are being exposed to unacceptable health risks;\n\n•\nregulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply\n\n \n\n52\n\n \n\nof devices or other materials necessary to conduct clinical trials may be insufficient, inadequate, or not available at an acceptable cost, or we may experience interruptions in supply;\n\n•\napproval policies or regulations of FDA or applicable foreign regulatory agencies may change in a manner rendering our clinical data insufficient for approval; and\n\n•\nour current or future products may have undesirable side effects or other unexpected characteristics.\n\nFailures or perceived failures in our clinical trials will delay and may prevent our product development and regulatory approval process, damage our business prospects, and negatively affect our reputation and competitive position.\n\nPatient enrollment in clinical trials and completion of patient follow-up depend on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, patient compliance, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages of the product being studied in relation to other available therapies, including any new treatments that may be approved for the indications we are investigating. For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post treatment procedures, monitoring or follow-up to assess the safety and efficacy of a product, or they may be persuaded to participate in contemporaneous clinical trials of a competitor’s product. In addition, patients participating in our clinical trials may drop out before completion of the trial or experience adverse medical events unrelated to our products. Delays in patient enrollment or failure of patients to continue to participate in a clinical trial may delay commencement or completion of the clinical trial, cause an increase in the costs of the clinical trial and delays, or result in the failure of the clinical trial.\n\nFrom time to time, we engage outside parties to perform services related to certain of our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates or obtain positive commercial reimbursement coverage for our products.\n\nClinical trials must be conducted in accordance with the laws and regulations of the FDA and other applicable regulatory authorities’ legal requirements, regulations, or guidelines, and are subject to oversight by these governmental agencies and IRBs at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of our devices produced under Quality Systems Regulations (the QSR) requirements and other regulations. From time to time, we engage consultants to help design, monitor and analyze the results of certain of our clinical trials, and we may have limited influence over their actual performance. The consultants we engage interact with clinical investigators to enroll patients in our clinical trials. We depend on these consultants and clinical investigators to conduct clinical trials and monitor and analyze data from these trials under the investigational plan and protocol for the study or trial and in compliance with applicable regulations and standards, such as GCP guidelines, the Common Rule, and FDA human subject protection regulations. We may face delays in our regulatory approval process if these parties do not perform their obligations in a timely, compliant, or competent manner. If these third parties do not successfully carry out their duties or meet expected deadlines, or if the quality, completeness, or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical trial protocols or for other reasons, our clinical trials or trials may be extended, delayed or terminated or may otherwise prove to be unsuccessful, and we may have to conduct additional trials, which would significantly increase our costs.\n\nOur long-term growth depends in part on our ability to innovate and enhance our Vivistim System, expand our approved indications and develop and commercialize additional products in a timely manner. If we fail to identify, acquire, or develop other products, we may be unable to grow our business.\n\nThe market for Vivistim Therapy is highly competitive, dynamic, and marked by rapid and substantial technological development and product innovation. New entrants or existing competitors could attempt to develop products that compete directly with ours. Demand for Vivistim Therapy and future related products could be diminished by equivalent or superior products and technologies offered by competitors. If we are unable to innovate successfully, our products could become obsolete, and our revenue would decline as our customers purchase our competitors’ products. Developing products is expensive and time-consuming and could divert management’s attention away from our core business. The success of any new product offering or product enhancements to our solution will depend on several factors, including our ability to:\n\n•\ndevelop an effective and dedicated commercial team;\n\n•\nassemble sufficient resources to acquire or discover additional products;\n\n•\nreceive adequate coverage and reimbursement for procedures performed with our products;\n\n•\ndevelop and introduce new products and product enhancements in a timely manner;\n\n \n\n53\n\n \n\n•\nproperly identify and anticipate physician and patient needs;\n\n•\nanticipate and respond to competitive developments;\n\n•\navoid infringing upon the intellectual property rights of third-parties and protect our own intellectual property rights;\n\n•\ndemonstrate, if required, the safety and efficacy of new products or new indications with data from preclinical trials and clinical trials;\n\n•\nobtain and maintain the necessary regulatory clearances or approvals for expanded indications, new products, or product modifications;\n\n•\nbe fully FDA-compliant with marketing of new devices or modified products;\n\n•\nprovide timely and effective customer and technical support;\n\n•\nproduce new products of an acceptable quality, in commercial quantities at an acceptable cost; and\n\n•\nprovide adequate training to physicians implanting and patients using of our products.\n\nIf we are unable to develop or improve products, applications or features due to constraints, such as insufficient cash resources, high employee turnover, inability to hire personnel with sufficient technical skills, or a lack of other research and development resources, we may not be able to maintain our competitive position compared to other companies. Furthermore, many of our competitors devote a considerably greater amount of funds to their research and development programs than we do, and those that do not may be acquired by larger companies that would allocate greater resources to research and development programs. Our failure or inability to devote adequate research and development resources or compete effectively with the research and development programs of our competitors could harm our business.\n\nIn addition, we may choose to focus our efforts and resources on potential products or indications that ultimately prove to be unsuccessful, or to license or purchase a marketed product that does not meet our financial expectations. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other potential products or other diseases that may later prove to have greater commercial potential, or relinquish valuable rights to such potential products through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to retain sole development and commercialization rights, which could adversely impact our business, financial condition and results of operations.\n\nOur success is highly dependent on our ability to attract and retain highly skilled executive officers and employees.\n\nTo succeed, we must continue to recruit, retain, manage, and motivate qualified executives as we build out the management team, and we face significant competition for experienced personnel. We are highly dependent on executive officers, other members of senior management, as well as on our sales personnel, which includes TMs and TDSs. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect our ability to execute our business plan and harm our results of operations. In particular, the loss of one or more of our executive officers could be detrimental to us if we cannot recruit suitable replacements in a timely manner. The competition for qualified personnel in the medical device and neurostimulation field is intense and as a result, we may be unable to continue to attract and retain qualified personnel necessary for the future success of our business. We could in the future have difficulty attracting experienced personnel to our company and may be required to expend significant financial resources in our employee recruitment and retention efforts.\n\nMany of the other medical device, life science, and technology companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better prospects for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what we have to offer. If our business performance declines, we may be unable to offer competitive compensation packages, which could make it difficult to retain our current sales personnel. Additionally, if our competitors increase the compensation offered to their sales personnel, we may be required to increase our own compensation levels, which could increase our operating expenses and negatively impact our profitability. If we fail to increase our own compensation levels to match that of competitors, we may be unable to attract or retain our existing TMs and TDSs, or to attract new TMs or TDSs, which would prevent us from expanding our business and generating sales. If we are unable to continue to attract and retain high-quality sales personnel, the rate and success at which we can discover, develop, and commercialize our current and future products will be limited and the potential for successfully growing our business will be materially and adversely affected.\n\nIn addition, job candidates and existing employees often consider the value of the share awards they receive in connection with their employment. If the perceived value of our share awards declines, it may harm our ability to recruit and retain highly skilled\n\n \n\n54\n\n \n\nemployees. Many of our employees have become or will soon become vested in a substantial amount of our common stock or a number of common stock underlying options. Our employees may be more likely to leave our company if the common stock they own has significantly depreciated in value relative to the original purchase prices of the common stock, or if the exercise prices of the options that they hold are significantly above the market price of our common stock.\n\nIf product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit or halt the marketing and sale of our Vivistim System. The expense and potential unavailability of insurance coverage for liabilities resulting from our Vivistim System could harm us and our ability to sell our Vivistim System.\n\nWe face an inherent risk of product liability as a result of the marketing and sale of our products. For example, we may be sued if our products cause or are perceived to cause injury or are found to be otherwise unsuitable. Any such product liability claim may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, or a breach of warranties. In addition, we may be subject to claims against us even if the apparent injury is due to the actions of others or the pre-existing health of the patient. For example, we rely on physicians to implant our Vivistim System in patients. If these physicians are not properly trained, do not appropriately screen out patients who are contraindicated or otherwise not well-suited for an implant procedure or general anesthesia, or are negligent, the capabilities of our products may be diminished, or the patient may suffer critical injury. We may also be subject to claims that are caused by the activities of our suppliers, such as those who provide us with components and sub-assemblies.\n\nIf we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or halt commercialization of our products. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:\n\n•\ndecreased demand for our products;\n\n•\ninjury to our reputation;\n\n•\ninitiation of investigations by regulators;\n\n•\na diversion of management’s time and our resources;\n\n•\nsubstantial monetary awards to trial participants or patients;\n\n•\nproduct recalls, withdrawals, or labeling, marketing or promotional restrictions;\n\n•\nloss of revenue;\n\n•\nexhaustion of any available insurance and our capital resources; and\n\n•\nthe inability to market and sell our products.\n\nAlthough we carry product liability insurance, it may not prove to be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain or obtain insurance at a reasonable cost or in an amount adequate to satisfy any liability that may arise. Our insurance policy contains various exclusions, and we may be subject to a product liability claim for which we have no coverage. The potential inability to obtain sufficient product liability insurance at an acceptable cost to protect against product liability claims could prevent or inhibit the marketing and sale of products we develop. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts, which would have a material adverse effect on our business, financial condition, and results of operations. In addition, any product liability claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing coverage, harm our reputation in the industry, significantly increase our expenses and reduce product sales.\n\nSome of our customers and prospective customers may also have difficulty in procuring or maintaining liability insurance to cover their operations and use of our products. Medical malpractice carriers are withdrawing coverage in certain states or substantially increasing premiums. If this trend continues or worsens, our customers may discontinue using our products and potential customers may opt against purchasing our products due to the cost or inability to procure insurance coverage.\n\nThe terms of our loan and security agreement places restrictions on our operations and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.\n\n \n\n55\n\n \n\nOn December 29, 2023, we entered into a loan and security agreement (the Loan and Security Agreement) with Horizon Technology Finance Corporation as lender and collateral agent. On June 1, 2024, Horizon Technology Finance Corporation assigned all of its right, title and interest in and to the loans outstanding under the Loan and Security Agreement and related warrants to Horizon Funding II, LLC, its wholly-owned subsidiary (together with Horizon Technology Finance Corporation, Horizon). The Loan and Security Agreement provides for term loans of up to an aggregate principal amount of $30.0 million, available in four equal tranches of $7.5 million available at various dates (the Commitments). The Company’s ability to draw additional loans under the Loan and Security Agreement expired on December 31, 2025. The Loan and Security Agreement matures on January 1, 2029. As of March 31, 2026, there was $7.5 million outstanding under the Loan and Security Agreement, representing the full available aggregate principal amount under the Loan and Security Agreement, and no additional tranches are available to draw down under the Loan and Security Agreement in the future.\n\nBorrowings under the Loan and Security Agreement bear interest at an annual rate equal to the greater of (i) The Wall Street Journal (or any successor thereto) prime rate (subject to a floor of 8.50%) plus 3.75%, and (ii) 12.25%. Amounts outstanding under the Loan and Security Agreement are secured by substantially all of our assets, excluding intellectual property. We must make interest payments under the Loan and Security Agreement, which have diverted and will continue to divert resources from other activities. The Loan and Security Agreement includes customary affirmative and negative covenants and events of default. The covenants related to the Loan and Security Agreement, as well as any future financing agreements into which we may enter, may restrict our ability to finance our operations and engage in, expand or otherwise pursue our business activities and strategies.\n\nWhile we have not previously breached and are not currently in breach of these or any other covenants contained in the Loan and Security Agreement, there can be no guarantee that we will not breach these covenants or any covenants under any other debt arrangements in the future. Our ability to comply with these covenants may be affected by events beyond our control, and future breaches of any of these covenants could result in a default under the Loan and Security Agreement. If not waived, future defaults could cause all of the outstanding indebtedness under the Loan and Security Agreement to become immediately due and payable and terminate commitments to extend further credit and foreclose on the collateral granted to it to collateralize such indebtedness. If we do not have or are unable to generate sufficient cash available to repay our debt obligations when they become due and payable, either upon maturity or in the event of a default, our assets could be foreclosed upon and we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively impact our ability to operate and continue our business as a going concern.\n\nIf we default under the Loan and Security Agreement, Horizon will be able to declare all obligations immediately due and payable and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. The lenders could declare a default under the Loan and Security Agreement upon the occurrence of specific events such as our failure to pay or our failure to comply with specified covenants, thereby requiring us to repay the loan immediately. Any declaration by the lenders of an event of default could significantly harm our business and prospects and could cause the price of our common shares to decline.\n\nIn order to service this indebtedness and any additional indebtedness we may incur in the future, we need to generate cash from our operating activities. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control. We cannot assure you that our business will be able to generate sufficient cash flow from operations or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry and in the economy generally. This may place us at a competitive disadvantage compared to our competitors that have less indebtedness.\n\nWe may incur additional indebtedness in the future. The debt instruments governing such indebtedness may contain provisions that are as, or more, restrictive than the provisions governing our existing indebtedness. If we are unable to repay, refinance or restructure our indebtedness when payment is due, the lenders could proceed against the collateral or force us into bankruptcy or liquidation.\n\nCost-containment efforts of our customers, purchasing groups and governmental organizations could have a material adverse effect on our business, financial condition and results of operations.\n\nIn an effort to reduce costs, many hospitals and ambulatory surgery centers (ASCs) in the United States have become members of group purchasing organizations (GPOs) and integrated delivery networks (IDNs). GPOs and IDNs negotiate pricing arrangements with medical device companies and distributors and then offer these negotiated prices to affiliated hospitals, ASCs and other members.\n\n \n\n56\n\n \n\nGPOs and IDNs typically award contracts on a category-by-category basis through a competitive bidding process. Bids are generally solicited from multiple providers with the intention of driving down pricing or reducing the number of vendors. Due to the highly competitive nature of the GPO and IDN contracting processes, we may not be able to obtain new, or maintain existing, contract positions with major GPOs and IDNs. Furthermore, the increasing leverage of organized buying groups may reduce market prices for our products, thereby reducing our revenue and margins.\n\nWhile having a contract with a GPO or IDN for a given product category can facilitate sales to members of that GPO or IDN, such contract positions can offer no assurance that any level of sales will be achieved, as sales are typically made pursuant to individual purchase orders. Even when a provider is the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN are generally free to purchase from other suppliers. Accordingly, even if we secure a contract with a GPO or an IDN, we nonetheless need to negotiate contracts or purchase orders with individual GPO or IDN members, which can further increase the length of our sales cycle, increase sales costs and means that our sales success is uncertain even if we contract with a GPO or IDN. Furthermore, the members of such groups may choose to purchase alternative products due to the price or quality offered by other companies, which could result in a decline in our revenue.\n\nIf we or our third-party providers fail to protect confidential information and/or experience data security incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, which could materially and adversely affect our business, results of operations and financial condition.\n\nWe rely on computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, IT Systems). We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services, including but not limited to financial records, facilitate our research and development initiatives, manage our manufacturing operations, maintain quality control, fulfill customer orders, maintain corporate records, communicate with staff and external parties and operate other critical functions. We and certain of our third-party providers collect, maintain and process data about customers, employees, business partners and others, including information about individuals, as well as confidential or proprietary information belonging to our business such as trade secrets (collectively, Confidential Information).\n\nCyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools—including AI—that circumvent security controls, evade detection and remove forensic evidence. As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material and adverse impact to our IT Systems, Confidential Information or business. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Furthermore, given the nature of complex systems, software and services like ours, and the scanning tools that we deploy across our networks and products, we regularly identify and track security vulnerabilities. We are unable to comprehensively apply patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches will be applied before vulnerabilities are exploited by a threat actor. If attackers are able to exploit critical vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises could impact our IT Systems and/or Confidential Information.\n\nWe and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Any adverse impact to the availability, integrity or confidentiality of our IT Systems or Confidential Information can result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs. Any or all of the foregoing could materially and adversely affect our business, results of operations and financial condition. Finally, we cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.\n\nTo the extent we expand sales of our products internationally in the future, we will be exposed to additional risks associated with international business.\n\nWhile we do not currently market outside of the United States, sales of products internationally will be subject to foreign regulatory requirements governing clinical trials and marketing approval. To the extent we expand sales of our products internationally in the future, we will incur substantial expenses. Additional risks related to operating in foreign countries include:\n\n•\ndiffering and evolving regulatory requirements and reimbursement regimes in foreign countries;\n\n \n\n57\n\n \n\n•\nunexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;\n\n•\nweaker intellectual property protections in certain foreign markets;\n\n•\ncompliance with tax, employment, immigration, and labor laws for employees living, working, or traveling abroad;\n\n•\nforeign taxes, including withholding of payroll taxes;\n\n•\nforeign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;\n\n•\ndifficulties staffing and managing foreign operations;\n\n•\nworkforce uncertainty in countries where labor unrest is more common than in the United States;\n\n•\npotential liability under the U.S. Foreign Corrupt Practices Act (FCPA) or comparable foreign regulations;\n\n•\nchallenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;\n\n•\nproduction shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;\n\n•\nthere may be intellectual property held by third parties specific to one or more of those jurisdictions that would limit our ability to distribute the product without a license; and\n\n•\nbusiness interruptions resulting from geo-political actions, including war and terrorism.\n\nThese and other risks associated with our international operations may materially and adversely affect our ability to attain or maintain profitable operations, which would have a material adverse effect on our business, financial condition and results of operations.\n\nIn addition, there can be no guarantee that we will receive marketing authorization to sell our products in every international market we target, nor can there be any guarantee that any sales would result even if such authorization is received. Regulatory requirements can vary widely from country to country and could delay the introduction of our products in those countries. Our inability to successfully enter all our desired international markets and manage business on a global scale could materially and adversely affect our business, financial results and results of operations.\n\nWe may acquire other companies’ technologies or intellectual property, which could fail to result in a commercial product or net sales, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and materially and adversely affect our results of operations.\n\nWe may in the future seek to acquire or invest in businesses, applications, technologies or intellectual property that we believe could complement or expand our portfolio, enhance our technical capabilities, or otherwise offer growth opportunities. However, we cannot assure you that we would be able to successfully complete any acquisition we choose to pursue, or that we would be able to successfully integrate any acquired business, product, or technology in a cost-effective and non-disruptive manner. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various costs and expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. We may not be able to identify desirable acquisition targets or be successful in entering into an agreement with any particular target or obtain the expected benefits of any acquisition or investment. We may also be unable to identify all material liabilities associated with companies we acquire and any indemnities which we receive from the target in connection with an acquisition may be unavailable or insufficient to cover such liabilities.\n\nTo date, the growth of our operations has been organic, and we have limited experience in acquiring other businesses or technologies. We may not be able to successfully integrate any acquired personnel, operations, and technologies, or effectively manage the combined business following an acquisition. Acquisitions could also result in dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could materially and adversely affect our results of operations. In addition, if an acquired business fails to meet our expectations, our business, financial condition and results of operations may be materially and adversely affected.\n\nRisks Related to Intellectual Property\n\n \n\n58\n\n \n\nIf we are unable to maintain existing, and obtain additional, patent and other intellectual property protection for our technology and products, or if the scope of the patent protection we obtained is not sufficiently broad, we may not be able to compete effectively in our markets.\n\nOur success depends in large part on our ability to maintain existing, and obtain additional, patent and other intellectual property protection in the United States and other countries with respect to our products and technology we develop.\n\nWe have protected and seek to protect our position by in-licensing intellectual property relating to our products and filing patent applications in the United States and abroad related to our technologies and products that are important to our business. Our ability to protect our products from unauthorized copying or recreation by third parties may be limited by the extent that such products are covered by valid and enforceable patents or include information that is effectively maintained as a trade secret. The actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends upon many factors, including the type of patent and the scope of its coverage. For example, we rely on patents covering how the Vivistim System is used, commonly referred to as method patents.\n\nWe also rely on a combination of contractual provisions, confidentiality procedures and copyright, trademark, trade secret, and other intellectual property rights to protect the proprietary aspects of our brand, technologies, and data. These legal measures afford only limited protection, and competitors or others may gain access to or use our intellectual property and Confidential Information. Our success will depend, in part, on obtaining and maintaining patents, preserving our trade secrets, maintaining the security of our data and know-how, and obtaining other intellectual property rights.\n\nWe may not be able to obtain and maintain intellectual property or other proprietary rights necessary to our business or in a form that provides us with a competitive advantage. For example, our trade secrets, data, and know-how could be subject to unauthorized use, misappropriation, or disclosure to unauthorized parties, despite our efforts to enter into confidentiality or other restrictive covenant agreements with our employees, consultants, contractors, clients, and other vendors who have access to such information, and could otherwise become known or be independently discovered by third parties. In addition, the patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost, in a timely manner, or in all jurisdictions where protection may be commercially advantageous, or we may not be able to protect our intellectual property at all. Despite our efforts to protect our intellectual property, unauthorized parties may be able to obtain and use information that we regard as proprietary. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, consultants, contractors, collaborators, vendors, and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were or will be the first to make the inventions claimed in our owned or any licensed patents or pending patent applications, or that we were or will be the first to file for patent protection of such inventions.\n\nThe patent position of medical device companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain, and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our owned and licensed patents. With respect to both in-licensed and owned intellectual property, we cannot predict whether the patent applications we and our licensors are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors. As a result, the issuance, scope, validity, enforceability, and commercial value of our patent rights are highly uncertain.\n\nMoreover, the coverage claimed in a patent application can be significantly reduced before a patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we license or own currently or in the future issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. Any patents that we hold or in-license may be challenged, narrowed, or invalidated by third parties. Additionally, our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner. Third parties may also have blocking patents that could prevent us from marketing our own products and practicing our own technology. Alternatively, third parties may seek approval to market their own products that are similar to or otherwise competitive with our products. In these circumstances, we may need to defend or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or agency with jurisdiction may find our patents invalid, unenforceable, or not infringed, in which case, our competitors and other third\n\n \n\n59\n\n \n\nparties may then be able to market products and use manufacturing and analytical processes that are substantially similar to ours. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.\n\nGiven that patent applications are confidential for a period of time after filing, we cannot be certain that we were the first to file any patent application related to our products. Competitors may also contest our patents, if issued, by showing the patent examiner that the invention was not original, was not novel, or was obvious. In litigation, a competitor could claim that our patents, if issued, are not valid for a number of reasons. If a court agrees, we would lose our rights to those challenged patents.\n\nIn addition, given the amount of time required for the development, testing, and regulatory review of new products, patents protecting such products might expire before or shortly after such products are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Moreover, some of our owned and in-licensed patents and patent applications are, and may in the future, be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interests in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us.\n\nOur other intellectual property, including our trademarks, could also be challenged, invalidated, infringed, and circumvented by third parties, and our trademarks could also be diluted, declared generic, or found to be infringing on other marks, in which case we could be forced to re-brand our products, resulting in loss of brand recognition and requiring us to devote significant resources to advertising and marketing new brands, and suffer other competitive harm. Third parties may also adopt trademarks similar to ours, which could harm our brand identity and lead to market confusion.\n\nWe may in the future also be subject to claims by our current or former employees, consultants, or contractors asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf. Although we generally require all of our employees, consultants, contractors, and any other partners or collaborators who have access to our proprietary know-how, information or technology to assign or grant similar rights to their inventions to us, we cannot be certain that we have executed such agreements with all parties who may have contributed to our intellectual property, nor can we be certain that our agreements with such parties will be upheld in the face of a potential challenge, or that they will not be breached, for which we may not have an adequate remedy.\n\nFailure to obtain and maintain patents, trademarks, and other intellectual property rights necessary to our business and failure to protect, monitor, and control the use of our intellectual property rights could negatively impact our ability to compete and cause us to incur significant expenses. The intellectual property laws and other statutory and contractual arrangements in the United States and other jurisdictions we depend upon may not provide sufficient protection in the future to prevent the infringement, use, violation, or misappropriation of our patents, trademarks, data, technology, and other intellectual property, and may not provide an adequate remedy if our intellectual property rights are infringed, misappropriated, or otherwise violated. Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.\n\nFurthermore, our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties. For example, this could arise if the research resulting in certain of our owned or in-licensed patent rights and technology was funded in part by the U.S. government. As a result, the government may have certain rights, or march-in rights, to such patent rights and technology. When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the government to use the invention for non-commercial purposes. These rights may permit the government to disclose our Confidential Information to third parties and to exercise march-in rights to use or allow third parties to use our licensed technology. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States. Any exercise by the government of such rights could materially and adversely affect our competitive position, business, financial condition, and results of operations.\n\nAny intellectual property litigation or administrative proceedings can be costly and could interfere with our ability to sell and market our products.\n\nThe medical device industry has been characterized by extensive litigation regarding patents, trademarks, trade secrets, and other intellectual property rights, and companies in the industry have used intellectual property litigation to gain a competitive advantage. It\n\n \n\n60\n\n \n\nis possible that United States and foreign patents and pending patent applications or trademarks controlled by third parties may be alleged to cover our products, or that we may be accused of misappropriating third parties’ trade secrets. Additionally, our products include components that we purchase from vendors and may include design components that are outside of our direct control. Our competitors, many of which have substantially greater resources and have made substantial investments in patent portfolios, trade secrets, trademarks, and competing technologies, may have applied for or obtained, or may in the future apply for or obtain, patents or trademarks that will prevent, limit, or otherwise interfere with our ability to make, use, sell, or export our products or to use product names. Because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover one or more of our products. Moreover, in recent years, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements. We may receive inquiries regarding our intellectual property, notices or “invitations to license,” or may be the subject of claims that our products and business operations infringe or violate the intellectual property rights of others.\n\nThe defense of intellectual property litigation can be time consuming and costly, can divert management’s attention and resources, damage our reputation and brand, and cause us to incur significant expenses or make substantial payments, whether or not we receive a determination favorable to us.\n\nEven if we believe a third party’s intellectual property claims are without merit, there is no assurance that a court would find in our favor, including on questions of infringement, validity, enforceability, or priority of patents. The strength of our defenses will depend on the patents asserted, the interpretation of these patents, and our ability to invalidate the asserted patents. In the United States, in order to successfully challenge the validity of a patent in federal court, we would need to overcome a presumption of validity. This standard of proof is a high one, requiring us to present clear and convincing evidence of the invalidity of each asserted claim of the patent. There is no assurance that the court would agree that we had met that standard. Conversely, the patent owner needs only to prove infringement by a preponderance of the evidence, which is a lower standard of proof. If a court of competent jurisdiction should hold that third-party patents are valid, enforceable, and infringed, this could materially and adversely affect our ability to commercialize any products or technology we may develop, and any other products or technologies covered by the asserted third-party patents.\n\nFurther, if patents, trademarks, or trade secrets are successfully asserted against us, this may harm our business and result in injunctions preventing us from developing, manufacturing, or selling our products or offering certain therapies with Vivistim Therapy, or result in obligations to pay license fees, damages, attorney fees, and court costs, which could be significant. In addition, if we are found to willfully infringe third-party patents or trademarks or to misappropriate trade secrets, we could be required to pay treble damages in addition to other penalties.\n\nIn addition, vendors from whom we purchase hardware or software may not indemnify us in the event that such hardware or software is accused of infringing a third party’s patent or trademark or of misappropriating a third party’s trade secret, or any indemnification granted by such vendors may not be sufficient to address any liability and costs we incur as a result of such claims. Additionally, we may be obligated to indemnify our customers or business partners in connection with litigation and to obtain licenses or refund subscription fees, which could further exhaust our resources.\n\nAlthough patent, trademark, trade secret and other intellectual property disputes in the medical device area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and could include ongoing royalties. We may be unable to obtain necessary licenses on satisfactory terms, if at all. In addition, if any license we obtain is non-exclusive, we may not be able to prevent our competitors and other third parties from using the intellectual property or technology covered by such license to compete with us. If we do not obtain necessary licenses, we may not be able to redesign our products to avoid infringement, and we could be forced to cease some aspects of our business operations. Any of these events could materially and adversely affect our business, financial condition, and results of operations.\n\nSimilarly, interference proceedings provoked by third parties or brought by the U.S. Patent and Trademark Office (the USPTO), may be necessary to determine priority of, or ownership rights in, our patents, patent applications, trademarks, or trademark applications. We may also become involved in other proceedings, such as reexamination, inter partes review, derivation or opposition proceedings relating to our or a third party’s patents or patent applications, or cancellation or opposition proceedings relating to our or a third party’s registered trademarks, before the USPTO or the equivalent body in other jurisdictions. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing our products or using product names, which would have a material adverse effect on our business, financial condition, and results of operations.\n\nAdditionally, we may file lawsuits or initiate other proceedings to protect or enforce our patents or other intellectual property rights, which could be expensive, time consuming and unsuccessful. Competitors may infringe our issued patents or other intellectual\n\n \n\n61\n\n \n\nproperty, which we may not always be able to detect. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe on their intellectual property or alleging that our intellectual property is invalid or unenforceable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may raise challenges to the validity of certain of our owned or in-licensed patent claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). In any such lawsuit or other proceedings, a court or other administrative body may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly, or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.\n\nThe outcome following legal assertions of invalidity and unenforceability is unpredictable. If a third party were to prevail over a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our products or products that we may develop. If our patents are found to be valid and infringed, a court may refuse to grant injunctive relief against the infringer and instead grant us monetary damages or ongoing royalties. Such monetary compensation may be insufficient to adequately offset the damage to our business caused by the infringer’s competition in the market. An adverse result in any litigation or other proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Any of these events could materially and adversely affect our business, financial condition, and results of operations.\n\nEven if resolved in our favor, litigation or other proceedings relating to intellectual property claims may cause us to incur expenses and could distract our personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential or sensitive information could be compromised by disclosure in the event of litigation. Uncertainties resulting from the initiation and continuation of patent and other intellectual property litigation or other proceedings could have a material adverse effect on our business, financial condition, and results of operations.\n\nObtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.\n\nPeriodic maintenance fees on any issued patent are due to be paid to the USPTO and other foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on our international patent application, failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. If we or any of our current or future licensors fail to maintain the patents and patent applications that we in-license, our competitors may be able to enter the market, which would have a material adverse effect on our business.\n\nThe terms of our patents may not be sufficiently long to effectively protect our products and business.\n\nPatents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after its first effective non-provisional filing date but can be shorter due to terminal disclaimers or similar term reductions in other jurisdictions. Although various extensions may be available, the term of a patent, and the protection it affords, are limited. Even if patents covering our technologies or products are obtained, once the patent term has expired, we may be open to competition. In addition, although upon issuance in the United States, a patent’s term can be increased based on certain delays caused by the USPTO, this increase can be\n\n \n\n62\n\n \n\nreduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. Given the amount of time required for the development, testing, and regulatory review of products, patents protecting such product candidates might expire before or shortly after such products are commercialized. If we do not have sufficient patent life to protect our technologies and products, our business, financial condition, and results of operations will be materially and adversely affected.\n\nWe may not identify relevant third-party patents or may incorrectly interpret the relevance, scope, or expiration of a third-party patent, which might adversely affect our ability to develop and market our products.\n\nWe cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims, or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our current and future products in any jurisdiction.\n\nThe scope of a patent claim is a legal conclusion that rests upon consideration of the written disclosure in a patent, the patent’s prosecution history, and usage by artisans in the relevant field. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products. We may incorrectly determine that our products are not covered by a third-party patent or may incorrectly predict whether a third party’s pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, and our failure to identify and correctly interpret relevant patents may materially and adversely impact our ability to develop and market our products.\n\nReliance on third parties may require us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.\n\nIf we rely on third parties to manufacture Vivistim Therapy, or any future products, or if we collaborate with third parties on future developments for Vivistim Therapy, or other future products, we may need to, at times, share trade secrets with them. We may also conduct research and development programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements. We seek to protect our trade secrets and other proprietary technology in part by entering into confidentiality agreements with third parties prior to disclosing Confidential Information. These agreements typically limit the rights of the third parties to use or disclose our Confidential Information, including our trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other Confidential Information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business, financial condition and results of operations.\n\nIn addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors, and other service providers to publish data potentially relating to our trade secrets. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development, or publication of information by any of our third-party collaborators. Moreover, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our Confidential Information or proprietary technology and processes. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. If any of the third parties who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets as a result. A competitor’s discovery of our trade secrets would impair our competitive position and have a material adverse effect on our business.\n\nWe may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.\n\nMany of our employees, consultants, and contractors were previously employed at or engaged by other medical device, biotechnology, or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, consultants, and contractors may have executed proprietary rights, non-disclosure, non-competition or other restrictive covenant agreements in connection with such previous employment or engagement. Although we try to ensure that our employees and consultants do not use the intellectual property, confidential information, know-how, or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other confidential information of these former employers or competitors.\n\n \n\n63\n\n \n\nAdditionally, we may be subject to claims from third parties challenging our ownership interest in intellectual property we regard as our own, based on claims that our employees, consultants, or contractors have breached an obligation to assign inventions to another employer, to a former employer, or to another person or entity. Litigation may be necessary to defend against any claims, and it may be necessary or we may desire to enter into a license to settle any such claim; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all. If our defense to those claims fails, in addition to paying monetary damages, a court could prohibit us from using technologies or features that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other confidential information of the former employers.\n\nAn inability to incorporate technologies or features that are important or essential to our products could have a material adverse effect on our business, financial condition, and results of operations, and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent TMs or TDSs. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could have a material adverse effect on our business, financial condition, and results of operations.\n\nWe may be subject to claims challenging the inventorship or ownership of our future patents and other intellectual property.\n\nWe may be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our patent applications, our future patents, or other intellectual property, including as an inventor or co-inventor. We may be subject to ownership or inventorship disputes in the future arising from, for example, conflicting obligations of consultants, contractors, or others who are involved in developing our products. Our success depends in part on our ability to obtain, maintain, protect, and enforce our intellectual property rights, including our patent rights, preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating, or otherwise violating the intellectual property rights of others. We rely on a combination of patents, trademarks, trade secrets, and other intellectual property rights to protect the products and technology that we consider important to our business.\n\nAlthough it is our policy to require our employees and contractors who may be involved in the conception or development of products, technology, know-how, and other proprietary materials (collectively, the Technology) to execute agreements assigning all intellectual property rights in and to such Technology to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops Technology that we regard as our own, and we cannot be certain that our agreements with such parties will be upheld in the face of a potential challenge, or that they will not be breached, for which we may not have an adequate remedy. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.\n\nOur rights to develop and commercialize our products are subject, in part, to the terms and conditions of licenses granted to us by others.\n\nWe rely, in part, upon licenses to certain patent rights and proprietary technology from third parties that are important or necessary to the development of our products and technology. These and other licenses may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and products in the future. As a result, we may not be able to prevent competitors from developing and commercializing competitive products in territories included in all of our licenses.\n\nIn addition, we may not have the right to control the preparation, filing, prosecution, maintenance, enforcement, and defense of patents and patent applications covering the technology that we license from third parties. Therefore, we cannot be certain that these patents and patent applications will be prepared, filed, prosecuted, maintained, enforced, and defended in a manner consistent with the best interests of our business. If our licensors fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize any of our products that are the subject of such licensed rights could be materially and adversely affected.\n\nOur licensors may have relied on third-party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents we in-license. This could materially and adversely affect our business, financial condition, and results of operations.\n\n \n\n64\n\n \n\nThe agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement. In spite of our best efforts, our licensors might also conclude that we have materially breached our license agreements and terminate the license agreements, thereby removing our ability to develop and commercialize products and technology covered by these license agreements. If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors will have the freedom to seek regulatory approval of, and to market, products identical to ours. In addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses. Any of these events could materially and adversely affect our business, financial condition and results of operations.\n\nIn the future, we may enter agreements involving licenses or collaborations that provide for access or sharing of intellectual property. If we fail to comply with our obligations under any license, collaboration, or other agreement, we may be required to pay damages and could lose intellectual property rights that are necessary for developing and protecting our current and future products.\n\nWe currently, and in the future may continue to, license from third parties certain intellectual property relating to our current and future products. In the event we do so, we may have certain obligations to such licensors. If we breach any material obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license, which could result in us being unable to develop, manufacture, and sell products that are covered by the licensed technology or enable a competitor to gain access to the licensed technology.\n\nDisputes may arise between us and our future licensors regarding intellectual property subject to a license agreement, including:\n\n•\nwhether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;\n\n•\nour right to sublicense patents and other rights to third parties;\n\n•\nour diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations;\n\n•\nour right to transfer or assign the license; and\n\n•\nthe ownership of inventions and know-how resulting from the joint creation or use of intellectual property by any of our future licensors and us and our partners.\n\nIf disputes over intellectual property that we license in the future prevent or impair our ability to maintain our licensing arrangements on acceptable terms, we may not be able to successfully develop and commercialize the affected products, which would have a material adverse effect on our business, financial condition and results of operations.\n\nIn addition, certain of our future agreements with third parties may limit or delay our ability to consummate certain transactions, may impact the value of those transactions, or may limit our ability to pursue certain activities. For example, we may in the future enter into license agreements that are not assignable or transferable, or that require the licensor’s express consent in order for an assignment or transfer to take place.\n\nFurther, we or our future licensors, if any, may fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Therefore, we may miss potential opportunities to strengthen our patent position. It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope, or requests for patent term adjustments. If we or our future licensors fail to establish, maintain, or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If our future licensors are not fully cooperative or disagree with us as to the prosecution, maintenance, or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form, preparation, prosecution, or enforcement of our patents or patent applications, such patents may be invalid or unenforceable, and such applications may never result in valid, enforceable patents. Any of these outcomes could impair our ability to prevent competition from third parties, which may have a material adverse effect on our business.\n\n \n\n65\n\n \n\nIn addition, even where we have the right to control patent prosecution of patents and patent applications under future license from third parties, we may still be adversely affected or prejudiced by actions or inactions of our predecessors or licensors and their counsel that took place prior to us assuming control over patent prosecution.\n\nOur technology acquired or licensed in the future from various third parties may be subject to retained rights. Our predecessors or licensors may retain certain rights under their agreements with us, including the right to use the underlying technology for noncommercial academic and research use, to publish general scientific findings from research related to the technology, and to make customary scientific and scholarly disclosures of information relating to the technology. It is difficult to monitor whether our predecessors or future licensors limit their use of the technology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse.\n\nIn addition, the U.S. federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (Bayh-Dole Act). The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit. The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself. If we choose to collaborate with academic institutions to accelerate our preclinical research or development, we cannot be sure that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act. If, in the future, we co-own or license technology which is critical to our business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, our ability to enforce or otherwise exploit patents covering such technology may be materially and adversely affected.\n\nIf we are limited in our ability to utilize acquired or future licensed technologies, or if we lose our rights to critical future in-licensed technology, we may be unable to successfully develop, out-license, market, and sell our products, which could prevent or delay new product introductions. Our business strategy depends on the successful development of acquired technologies, and possibly in the future licensed technology, into commercial products. Therefore, any limitations on our ability to utilize these technologies may impair our ability to develop, out-license, or market and sell our products.\n\nWe may not be successful in obtaining necessary rights to any products we may develop through acquisitions and in-licenses.\n\nWe may need to obtain additional licenses from our existing licensors or otherwise acquire or in-license any intellectual property rights from third parties that we identify as necessary for our products. It is possible that we may be unable to obtain any additional licenses or acquire such intellectual property rights at a reasonable cost or on reasonable terms, if at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources, and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all. In that event, we may be required to expend significant time and resources to redesign our technology, products, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected products, which could have a material adverse effect on our business, financial condition, and results of operations.\n\nAny collaboration or partnership arrangements that we may enter into in the future may not be successful, which could materially and adversely affect our ability to develop and commercialize our products.\n\nAny future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborations are subject to numerous risks, which may include that:\n\n•\ncollaborators have significant discretion in determining the efforts and resources that they will apply to collaborations;\n\n•\ncollaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities;\n\n•\ncollaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our current and future products;\n\n \n\n66\n\n \n\n•\na collaborator with marketing, manufacturing, and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities;\n\n•\nwe could grant exclusive rights to our collaborators that would prevent us from collaborating with others;\n\n•\ncollaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or Confidential Information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or Confidential Information or expose us to potential liability;\n\n•\ndisputes may arise between us and a collaborator that cause the delay or termination of the research, development, or commercialization of our current or future products, or that result in costly litigation or arbitration that diverts management attention and resources;\n\n•\ncollaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products;\n\n•\ncollaborators may own or co-own intellectual property covering our products that result from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and\n\n•\na collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws, resulting in civil or criminal proceedings.\n\nIf we are unable to protect the confidentiality of our other Confidential Information, our business and competitive position may be materially and adversely affected.\n\nIn addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, and other Confidential Information that is not patentable or that we elect not to patent. However, trade secrets can be difficult to protect, and some courts are less willing or unwilling to protect trade secrets. To maintain the confidentiality of our trade secrets and Confidential Information, we rely heavily on confidentiality provisions and other restrictive covenants that we have in contracts with our employees, consultants, collaborators, and others upon the commencement of their relationship with us. We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by such third parties, despite the existence generally of these confidentiality restrictions. These contracts may not provide meaningful protection for our trade secrets, know-how, or other Confidential Information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other Confidential Information. There can be no assurance that such third parties will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors. Despite the protections we place on our intellectual property or other proprietary rights, monitoring unauthorized use and disclosure of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary rights will be adequate. In addition, the laws of many foreign countries will not protect our intellectual property or other proprietary rights to the same extent as the laws of the United States. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could materially and adversely affect our ability to expand to international markets or require costly efforts to protect our technology.\n\nTo the extent our intellectual property or other Confidential Information protection is incomplete, we are exposed to a greater risk of direct competition. A third party could, without authorization, copy or otherwise obtain and use our products or technology, or develop similar technology. Our competitors could purchase our products and attempt to replicate some or all of the competitive advantages we derive from our development efforts or design around our protected technology. Our failure to secure, protect, and enforce our intellectual property rights could materially and adversely harm the value of our products, brand, and business. The theft or unauthorized use or publication of our trade secrets and other Confidential Information could reduce the differentiation of our products and harm our business, the value of our investment in development or business acquisitions could be reduced, and third parties might make claims against us related to losses of their confidential information. Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.\n\nFurther, it is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology, and in such cases, we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions. If we fail to obtain or maintain trade secret protection, or if our competitors obtain our trade secrets or independently develop technology similar to ours or competing technologies, our competitive market position could be materially and adversely affected. In addition, some courts are less willing or unwilling to protect trade secrets, and agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases.\n\n \n\n67\n\n \n\nWe also seek to preserve the integrity and confidentiality of our data and other Confidential Information by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations, and systems, agreements or security measures may be breached and detecting the disclosure or misappropriation of Confidential Information and enforcing a claim that a party illegally disclosed or misappropriated Confidential Information is difficult, expensive, and time-consuming, and the outcome is unpredictable. Further, we may not be able to obtain adequate remedies for any breach.\n\nChanges in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of our patents in general, thereby impairing our ability to protect our products and could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our current or future patents.\n\nOur ability to obtain patents and the breadth of any patents obtained is uncertain in part because, to date, some legal principles remain unresolved, and there has not been a consistent policy regarding the breadth or interpretation of claims allowed in patents in the United States and other countries. Changes in either patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property rights or narrow the scope of our patent protection, which in turn could diminish the commercial value of our products, services, and technologies.\n\nThe United States has enacted and implemented wide-ranging patent reform legislation, and further patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement, and defense of our patents and applications. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions, or changes in the governmental bodies that enforce them, or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we have licensed or that we may obtain in the future. For example, in June 2023, the European Unitary Patent system and the European Unified Patent Court (UPC) were launched. European patent applications now have the option, upon grant of a patent, of becoming a Unitary Patent which is subject to the jurisdiction of the UPC. In addition, conventional European patents, both already granted at the time the new system began and granted thereafter, are subject to the jurisdiction of the UPC, unless actively opted out. This was a significant change in European patent practice, and deciding whether to opt-in or opt-out of Unitary Patent practice entails strategic and cost considerations. The UPC provides third parties with a new forum to centrally revoke our European patents and makes it possible for a third party to obtain pan-European injunctions against us. It will be several years before we will understand the scope of patent rights that will be recognized and the strength of patent remedies that will be provided by the UPC. While we have the right to opt our patents out of the UPC over the first seven years of the court’s existence, doing so may preclude us from realizing the benefits of the UPC. Moreover, the decision whether to opt-in or opt-out of Unitary Patent status will require coordinating with co-applicants, if any, adding complexity to any such decision.\n\nWe cannot predict future changes in the interpretation of patent laws in the United States and other countries or changes to patent laws that might be enacted into law by U.S. and foreign legislative bodies. Those changes may materially and adversely affect our patents or patent applications and our ability to obtain additional patent protection in the future. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, and results of operations.\n\nWe may not be able to protect our intellectual property rights throughout the world, which could impair our business.\n\nFiling, prosecuting, and defending patents covering Vivistim Therapy, and any of our future products throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may have or obtain patent protection, but where patent enforcement is not as strong as that in the United States. These unauthorized products may compete with our products in such jurisdictions and take away our market share where we do not have any issued or licensed patents, and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.\n\nIntellectual property rights do not necessarily address all potential threats to our competitive advantage.\n\n \n\n68\n\n \n\nThe degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:\n\n•\nothers may be able to make products that are similar to our current or future products we intend to commercialize that are not covered by the patents that we exclusively licensed and have the right to enforce;\n\n•\nan in-license necessary for the manufacture, use, sale, offer for sale, or importation of one or more of our current or future products may be terminated by the licensor;\n\n•\nwe or any of our current or future licensors or collaborators might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own;\n\n•\nwe or any of our current or future licensors might not have been the first to file patent applications covering certain of our inventions;\n\n•\nothers may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;\n\n•\nit is possible that our pending patent applications will not lead to issued patents;\n\n•\nissued patents that we own may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges;\n\n•\nour competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;\n\n•\nthe patents of others may have an adverse effect on our business; and\n\n•\nwe may not develop additional proprietary technologies that are patentable.\n\nOur use of “open source” software could subject the proprietary software we use to general release, materially and adversely affect our ability to sell our products and subject us to possible litigation.\n\nWe use “open source software” in a portion of the products or technologies licensed, developed, or distributed by us, including as incorporated into software we receive from third-party commercial software vendors, and we may incorporate open source software into other products in the future. Such open source software is generally licensed by its authors or other third parties under open source licenses. Some open source licenses contain requirements that we disclose source code for modifications we make to the open source software and that we license such modifications to third parties at no cost. In some circumstances, distribution of the software we utilize in connection with open source software could require that we disclose and license some or all of our proprietary code in that software, as well as distribute our products that use particular open source software at no cost to the user. We monitor our use of open source software in an effort to avoid uses in a manner that would require us to disclose or grant licenses under our proprietary source code; however, there can be no assurance that such efforts will be successful. Open source license terms are often ambiguous and such use could inadvertently occur. There is little legal precedent governing the interpretation of many of the terms of these licenses, and the potential impact of these terms on our business may result in unanticipated obligations regarding our products and technologies. Companies that incorporate open source software into their products have, in the past, faced claims seeking enforcement of open source license provisions and claims asserting ownership of open source software incorporated into their products. If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of an open source license, we could incur significant legal costs defending ourselves against such allegations. In the event such claims were successful, we could be subject to significant damages or be enjoined from the distribution of our products. In addition, if we combine our proprietary software with open source software in certain ways, under some open source licenses, we could be required to release the source code of our proprietary software, which could substantially help our competitors develop products that are similar to or better than ours and otherwise adversely affect our business. These risks could be difficult to eliminate or manage, and, if not addressed, could materially and adversely affect our business, financial condition, and results of operations.\n\nIf our trademarks and tradenames are not adequately protected, then we may not be able to build name recognition in our markets and our business may be materially and adversely affected.\n\nWe rely on trademarks, service marks, tradenames, and brand names to distinguish our products from the products of our competitors and have registered or applied to register these trademarks. We cannot assure you that our trademark applications will be approved. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to\n\n \n\n69\n\n \n\nthose rejections, we may be unable to overcome such rejections. In addition, in proceedings before the USPTO and comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources towards advertising and marketing new brands.\n\nFor example, we have not registered the name “MicroTransponder,” “Mobia” or “Mobia Medical” as a word trademark in the United States on the principal register, although we have obtained registration of the name “MicroTransponder” on the supplemental register. Registration on the principal register offers certain protections not provided to registrations on the supplemental register, including the right to obtain statutory damages and attorneys’ fees in connection with third party infringement of the trademark, the right to register a mark with U.S. Customs to prevent the importation of goods that contain infringing marks and the ability to seek incontestability status after five years of registration on the primary register. Without a registered trademark on the principal register, we may encounter difficulty in enforcing, or be unable to enforce, the name “MicroTransponder,” “Mobia” or “Mobia Medical” against third parties in the United States, which could adversely affect our business and our ability to effectively compete in the marketplace.\n\nAt times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. Certain of our current or future trademarks may become so well known by the public that their use becomes generic and they lose trademark protection. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business, financial condition and results of operations may be materially and adversely affected.\n\nRisks Related to Government Regulation\n\nOur products and operations are subject to extensive government regulation and oversight in the United States, and our failure to comply with applicable requirements could materially and adversely affect our business.\n\nOur products are regulated as medical devices in the United States. Medical devices and their manufacturers and product developers are subject to extensive regulation in the United States, including by the FDA. The FDA regulates, among other things, with respect to medical devices: design, development, and manufacturing; testing, labeling, content, and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, sales, and distribution; premarket clearance, classification, and approval or certification; recordkeeping procedures; complaint procedures and protocols, including documentation thereof; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market studies; and product import and export.\n\nThe regulations to which we are subject are complex, burdensome to understand and apply, and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. The FDA enforces its regulatory requirements through, among other means, periodic unannounced inspections. We do not know whether we or any of our contract manufacturers will be found compliant in connection with any future FDA or foreign inspections. Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as: FDA inspectional observations; warning letters; fines; injunctions; civil penalties; termination of distribution; import alerts; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances or approvals; withdrawals or suspensions of clearances or approvals, resulting in prohibitions on sales of our products; and in the most serious cases, criminal penalties. For example, following a routine FDA inspection in March 2026, we received a notice of inspectional observations, or Form 483, with one observation involving two events for which a medical device report was not submitted within 30 days of receiving or otherwise becoming aware of information regarding such events. These events have since been reported and we believe we have since addressed this observation with a corrective and preventative action plan, which included streamlined procedures for evaluating potential adverse events and training for relevant personnel at the Company regarding these procedures and reporting. We submitted a formal written response to FDA in April 2026. To date, the FDA has not taken any further action with respect to the inspection or its findings.\n\nFailure to maintain marketing authorizations for our products, or to timely obtain necessary marketing authorizations for our future products, may have a material and adverse effect on our business, financial condition and results of operations.\n\nOur products are subject to extensive regulation by the FDA and the Federal Communications Commission (the FCC) in the United States and by regulatory agencies in other countries where we do business. For medical devices involving radio frequency (RF)\n\n \n\n70\n\n \n\nwireless technologies, the FDA’s policies on wireless medical devices coordinate with the FCC. In the United States, before we can market a new medical device, or a new use of, or other significant modification to an existing, marketed medical device, we must first receive either clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act (the FDCA), approval of a premarket approval (PMA) application, or grant of a de novo classification request from the FDA, unless an exemption applies. In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA and later down-classified, or a 510(k)-exempt device. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support substantial equivalence. In the process of obtaining PMA approval, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, pre-clinical, clinical trial, manufacturing, and labeling data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices.\n\nIn the de novo classification process, a manufacturer whose novel device under the FDCA would otherwise be automatically classified as Class III and require the submission and approval of a PMA prior to marketing is able to request down-classification of the device to Class I or Class II on the basis that the device presents a low or moderate risk. If the FDA grants the de novo classification request, the applicant will receive authorization to market the device. This device type may be used subsequently as a predicate device for future 510(k) submissions.\n\nThe PMA approval, 510(k) clearance and de novo classification processes can be expensive, lengthy, and uncertain. The FDA’s 510(k) clearance process usually takes from three to 12 months, but can take longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is submitted to the FDA. In addition, a PMA generally requires the performance of one or more clinical trials. Clinical data may also be required in connection with an application for 510(k) clearance or a de novo classification request. Despite the time, effort and cost, a device may not obtain marketing authorization by the FDA. We have obtained PMA approval for Vivistim Therapy, and we must obtain marketing authorization for any future devices we develop or future additional indications for Vivistim Therapy, unless they are exempt. Marketing authorizations for any of our future products, if granted, may include significant limitations on the indicated uses for the device, which may limit the potential commercial market for the device.\n\nIn the United States, any modification to a medical device for which we have obtained a PMA may require us to submit a new PMA or PMA supplement and obtain FDA approval. For example, certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. We have made modifications to our approved Vivistim Therapy and submitted and received approval of PMA supplements in the past. We may make modifications or add additional features in the future to Vivistim Therapy that we believe do not require a new approval of a PMA or PMA supplement. If the FDA disagrees with our determination and requires us to seek new marketing authorizations for the modifications for which we have concluded that new marketing authorizations are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain such marketing authorization, and we may be subject to significant regulatory fines or penalties. If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, product introductions or modifications could be delayed or canceled, which could adversely affect our business.\n\nThe FDA can delay, limit or deny marketing authorization of a device for many reasons, including:\n\n•\nour inability to demonstrate to the satisfaction of the FDA that our products are substantially equivalent to a predicate device or are safe and effective for their intended uses;\n\n•\nthe disagreement of the FDA with the design or implementation of clinical trials or the interpretation of data from preclinical trials or clinical trials;\n\n•\nserious and unexpected adverse device effects experienced by participants in clinical trials;\n\n•\nthe data from preclinical trials and clinical trials may be insufficient to support clearance, de novo classification, or approval, where required;\n\n \n\n71\n\n \n\n•\nour inability to demonstrate that the clinical and other benefits of the device outweigh the risks;\n\n•\nthe manufacturing process or facilities we use may not meet applicable requirements; and\n\n•\nthe potential for marketing authorization regulations of the FDA to change significantly in a manner rendering our clinical data or regulatory filings insufficient for marketing authorization.\n\nWe are subject to ongoing regulatory review and scrutiny. Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market.\n\nWe are subject to ongoing and extensive regulatory requirements governing, among other things, the manufacture, marketing, advertising, medical device reporting, sale, promotion, import, export, registration, and listing of devices. For example, medical device manufacturers must submit certain reports to the FDA and keep required records as a condition of obtaining and maintaining marketing authorization. These reports include information about failures and certain adverse events potentially associated with the device after its marketing authorization. Failure to submit such reports, or failure to submit the reports in a timely manner, could result in enforcement action by the FDA. Following its review of the periodic reports, the FDA might ask for additional information or initiate further investigation.\n\nRegulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs, or lower than anticipated sales. We have ongoing responsibilities under FDA regulations, and the FDA and state regulatory authorities have broad enforcement powers. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state regulatory authorities, which may include any of the following or other sanctions:\n\n•\nuntitled letters or warning letters;\n\n•\nfines, injunctions, consent decrees, and civil penalties;\n\n•\nrecalls, termination of distribution, administrative detention, or seizure of our products;\n\n•\ncustomer notifications or repair, replacement, or refunds;\n\n•\noperating restrictions or partial suspension or total shutdown of production;\n\n•\ndelays in or refusal to grant our requests for future clearances, de novo classifications or approvals, or comparable foreign marketing authorizations of new products, new intended uses, or modifications to existing products;\n\n•\nwithdrawals or suspensions of any granted marketing authorizations, resulting in prohibitions on sales of our products;\n\n•\nFDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and\n\n•\ncriminal prosecution.\n\nAny of these sanctions could result in negative publicity, higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations.\n\nIn addition, the FDA may change its marketing authorization policies which may affect future products. The FDA may adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay marketing authorization of any products under development or impact our ability to modify any products authorized for market on a timely basis. Such changes may also occur in foreign jurisdictions where we may market our products in the future. Such changes could impose additional requirements upon us that could delay our ability to obtain future marketing authorizations, increase the costs of compliance, or restrict our ability to maintain any marketing authorizations we have obtained.\n\nThe misuse or off-label use of our products may result in injuries that harm patients and lead to product liability suits, harm our reputation in the marketplace, or result in costly investigations, fines, or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.\n\nVivistim Therapy, and any marketing authorization we may receive for future products, is, and will be, limited to specified indications for use. We train our commercial team, including our direct sales force, to not promote our device for use outside of the FDA-authorized indications for use, known as “off-label uses.” However, this training may not be effective in preventing all instances of off-label promotion. We cannot, in addition, prevent a healthcare professional from using our devices off-label, when in the healthcare professional’s independent professional judgment he or she deems it appropriate. There may be increased risk of injury to\n\n \n\n72\n\n \n\npatients if healthcare professionals attempt to use our devices off-label, which could harm our reputation in the marketplace among healthcare professionals and patients.\n\nIf the FDA determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine, or criminal penalties. It is also possible that other federal or state enforcement authorities might take action under other regulatory authority, such as false advertising and consumer protection laws, or false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil, and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, and the curtailment of our operations.\n\nIn addition, healthcare professionals may misuse our products or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If our devices are misused or used with improper technique, we may become subject to costly litigation by our customers or their patients. As described above, even if we are ultimately successful in our defense, product liability claims could divert management’s attention from our core business, be expensive to defend, and result in sizeable damage awards against us that may not be covered by insurance, all of which would have a material adverse effect on our business, financial condition and results of operations.\n\nOur products must be manufactured in accordance with applicable laws and regulations, and we could be forced to recall our devices or terminate production if we fail to comply with these regulations.\n\nIn the United States, the methods used in, and the facilities used for, the manufacture of medical devices must comply with the FDA’s Current Good Manufacturing Practices for medical devices, known as the Quality System Regulation (QSR), which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing, and shipping of medical devices. On February 23, 2024, the FDA issued a final rule to amend the QSR to align more closely with the International Organization for Standardization (ISO) standards. Specifically, this final rule, which the FDA expects to go into effect on February 2, 2026, replaces the QSR with the Quality Management System Regulation (QMSR), and among other things, incorporates by reference the quality management system requirements of ISO 13485:2016. Although the FDA has stated that the standards contained in ISO 13485:2016 are substantially similar to those set forth in the QSR, it is unclear the extent to which this final rule, once effective, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise create market pressure that may negatively affect our business. Furthermore, we are required to verify that our suppliers maintain facilities, procedures, and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSR, and is expected to enforce the QMSR, through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors. Our products are also subject to similar state regulations governing manufacturing.\n\nDespite our efforts to ensure compliance, we or our third-party manufacturers may not take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our medical devices. In addition, failure to comply with applicable FDA requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things: warning letters or untitled letters; fines, injunctions, or civil penalties; suspension or withdrawal of marketing authorizations; seizures or recalls of our products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s refusal to grant pending or future clearances or approvals for our products or similar decisions by foreign regulatory authorities or notified bodies; clinical holds; refusal to permit the import or export of our products; and criminal prosecution of us, our suppliers, or our employees. Any of these actions could significantly and negatively affect supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs. We are also subject to similar state requirements and licenses.\n\nOur products have in the past, and may in the future cause or contribute to adverse medical events or be subject to failures or malfunctions which we may be required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could materially and adversely affect our reputation, business, financial condition and results of operations. In addition, the discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA, could have a material adverse effect on us.\n\nThere have been, and there may continue to be side effects and adverse events associated with the use of our medical devices or any future devices we develop. The FDA’s medical device reporting regulations require us to assess reportability of adverse events that come to our attention and report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction\n\n \n\n73\n\n \n\nwere to recur, it could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product. The FDA may also disagree with our determinations that an event was not reportable. If we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our marketing authorizations, seizure of our products, or delay in obtaining marketing authorizations for our future products.\n\nThe FDA has the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated or voluntary recall by us could in the future occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects, or other deficiencies or failures to comply with applicable regulations. Product defects or other errors may occur in the future.\n\nDepending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new marketing authorizations for the device before we may market or distribute the corrected device. Seeking such clearances or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.\n\nCompanies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may in the future initiate voluntary withdrawals or corrections for our products that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, it could require us to report those actions as recalls and we may be subject to enforcement action. A future recall announcement could materially and adversely affect our reputation with customers, potentially lead to product liability claims against us, and materially and adversely affect our sales. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may materially and adversely affect our reputation, business, financial condition and results of operations and could expose us to material claims and losses.\n\nHealthcare reform initiatives and other administrative and legislative proposals in the United States may materially and adversely affect our business, financial condition and results of operations.\n\nThere have been and continue to be proposals by the federal government, state governments, regulators, and third-party payors to control or manage the increased costs of healthcare and, more generally, to reform the United States healthcare system. Outside of the United States, foreign governments and regulatory authorities may implement new requirements that could impact our business and market acceptance. Certain of these proposals could limit the prices we are able to charge for our products or the coverage and reimbursement available for our products and could limit the acceptance and availability of our products. The adoption of proposals to control costs could have a material adverse effect on our business, financial condition and results of operations.\n\nFor example, in the United States, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, together, the Affordable Care Act (the ACA) was enacted. The ACA made a number of substantial changes to the way healthcare is financed by both governmental and private insurers, including the imposition of health insurance mandates on employers and individuals, the provision of subsidies to eligible individuals enrolled in plans offered on the health insurance exchanges and the expansion of the Medicaid program.\n\nSince its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. More recently, the One Big Beautiful Bill Act (the OBBBA) was signed into law on July 4, 2025, and contains provisions that, among other changes, are expected to reduce the number of individuals enrolled in state Medicaid programs and ACA marketplace plans, which could adversely affect commercialization of Vivistim Therapy. We cannot predict how other litigation or legislative efforts, or the healthcare reform measures of the Trump administration will impact our business. The Trump administration is currently pursuing policies to reduce regulations and expenditures across government including at the U.S. Department of Health and Human Services, the FDA, the CMS, and related agencies. It is possible that certain of these changes could impose additional limitations on the rates we will be able to charge for our current and future products or the amounts of reimbursement available for our customers for procedures in which our products are utilized from governmental agencies or\n\n \n\n74\n\n \n\nthird-party payors. We cannot assure you that the ACA or the OBBBA, as currently enacted or as amended in the future, will not harm our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.\n\nIn addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, includes reductions to Medicare payments to providers, which went into effect on April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2032, unless additional congressional action is taken.\n\nAdditionally, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015 (the MACRA) enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations. It is unclear what effect new quality and payment programs may have on our business, financial condition, results of operations, or cash flows. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our products, if approved, and accordingly, our financial operations.\n\nThere likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may harm:\n\n•\nour ability to set a price that we believe is fair for our products;\n\n•\nour ability to generate revenue and achieve or maintain profitability; and\n\n•\nthe availability of capital.\n\nFurther, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal legislation designed to bring transparency to product pricing and reduce the cost of products and services under government healthcare programs. While some of these measures may require additional authorization to become effective, Congress and the Federal administration have each indicated that it will continue to seek new legislative or administrative measures to control product costs. Additionally, individual states in the United States have also increasingly passed legislation and implemented regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures. Moreover, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what products to purchase and which suppliers will be included in their programs. Adoption of price controls and other cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures may prevent or limit our ability to generate revenue and attain profitability. Various new healthcare reform proposals are emerging at the federal and state level. Any new federal and state healthcare initiatives that may be adopted could limit the amounts that federal and state governments will pay for healthcare products and services and could have a material adverse effect on our business, financial condition and results of operations.\n\nIf we fail to comply with U.S. federal and state fraud and abuse and other healthcare laws and regulations, we could face substantial penalties and our business operations and financial condition could be materially and adversely affected. In addition, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could materially and adversely affect our business.\n\nThe U.S. healthcare industry is heavily regulated and closely scrutinized by foreign, federal, state and local authorities. We are subject to various state and federal fraud and abuse, anti-kickback, false claims, transparency requirements, consumer protection and other healthcare laws and regulations. These laws constrain the business and financial arrangements and relationships through which we research, sell, market, and distribute our products, such as our arrangements with hospitals, physicians, therapists, customers and third-party payors. Healthcare fraud and abuse laws and related regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been violated. The laws that may affect our ability to operate include, but are not limited to:\n\n \n\n75\n\n \n\n•\nthe federal Anti-Kickback Statute (AKS), which prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration for referring an individual, in return for ordering, leasing, purchasing or recommending or arranging for or to induce the referral of an individual or the ordering, purchasing or leasing of items or services covered, in whole or in part, by any federal healthcare program, such as Medicare and Medicaid. “Remuneration” includes the transfer of anything of value, in cash or in kind and directly or indirectly. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;\n\n•\nthe federal False Claims Act (FCA), which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits. Private individuals can bring False Claims Act “qui tam” actions, on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in amounts paid by the entity to the government in fines or settlement. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;\n\n•\nthe federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;\n\n•\nthe criminal healthcare fraud provisions of HIPAA and related rules, which prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;\n\n•\nthe federal transparency requirements under the Physician Payments Sunshine Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to report to CMS information related to payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician providers (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members;\n\n•\nfederal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;\n\n•\nfederal and state anti-inducement laws, which prohibit the offer or transfer of remuneration that would influence the patient to order or receive a healthcare item or service; and\n\n•\nanalogous state and foreign laws and regulations, such as state anti-kickback and false claims laws which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers or patients, state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, and state and local laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and require the registration of their TMs or other sales personnel.\n\nDue to the breadth of these laws and the narrowness of statutory exceptions and regulatory safe harbors available, it is possible that some of our current or future practices, such as our commercial activities, interactions with physicians and patients, and reimbursement support activities might be challenged, by regulatory authorities, our competitors or others, under one or more of these laws.\n\nTo enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their scrutiny of interactions between medical device and pharmaceutical manufacturers and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations and qui tam actions can be time-and resource-consuming and can divert management’s attention from the business. Additionally, as a result of these investigations, manufacturers may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business, financial condition and results of operations. Even an unsuccessful challenge or investigation into our practices could cause adverse publicity and be costly.\n\n \n\n76\n\n \n\nAchieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly. If our operations are found to be in violation of any of the federal, state and foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil, and administrative penalties, damages, fines, exclusion from participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm and disgorgement and we could be required to curtail, restructure or cease our operations. Any of the foregoing consequences will materially and adversely affect our business, financial condition and results of operations.\n\nLegislative or regulatory reforms in the United States may make it more difficult and costly for us to manufacture, market, or distribute our products, or to obtain marketing authorizations for any future products.\n\nFrom time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulation of medical devices. In addition, the FDA may change its clearance and approval policies, adopt additional regulations, or revise existing regulations, or take other actions, which may prevent or delay marketing authorization of any future products under development or impact our ability to modify any products for which we have already obtained marketing authorizations on a timely basis. For example, on January 31, 2024, the FDA issued a final rule to amend the QSR, which establishes current good manufacturing practice requirements for medical device manufacturers, to align more closely with the ISO standards. Specifically, this final rule, which the FDA expects to go into effect on February 2, 2026, replaces the QSR with the QMSR, and among other things, incorporates by reference the quality management system requirements of ISO 13485:2016. Although the FDA has stated that the standards contained in ISO 13485:2016 are substantially similar to those set forth in the existing QSR, it is unclear the extent to which this final rule, once effective, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise create market pressure that may materially and adversely affect our business. It is unclear to what extent any other legislative or regulatory proposal, if adopted, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise create competition that may materially and adversely affect our business.\n\nIn addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may make it more difficult and costly to manufacture, market, or distribute our commercialized products, or may impose additional costs, lengthen marketing authorization review times, or make it more difficult to obtain marketing authorizations for any future products we develop. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitability.\n\nWe are subject to numerous laws and regulations related to anti-bribery and anti-corruption laws, such as the FCPA, anti-money laundering laws, and economic and trade sanctions, in which violations of these laws could result in substantial penalties and prosecution.\n\nWe are similarly subject to various heavily enforced anti-bribery and anti-corruption laws, such as the FCPA, anti-money laundering laws, and similar laws around the world. The FCPA or other anti-corruption and anti-bribery laws generally prohibit U.S. companies and their employees and intermediaries from offering, promising, authorizing, or making improper payments to foreign government officials for the purpose of obtaining or retaining business or gaining any advantage. We face significant risks if we, which includes our third-party business partners and intermediaries, fail to comply with the FCPA or other anti-corruption and anti-bribery laws. Certain suppliers of components of our devices are located in countries known to experience corruption. Business activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, consultants, contractors, or agents that could be in violation of various laws, including the FCPA and anti-bribery laws in these countries, even though these parties are not always subject to our control. While we have implemented policies and procedures designed to discourage these practices by our employees, consultants, contractors and agents and to identify and address potentially impermissible transactions under such laws and regulations, we cannot assure you that none of our employees, consultants, contractors and agents will take actions in violation of our policies, for which we may be ultimately responsible.\n\nWe are also subject to certain economic and trade sanctions programs, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, which prohibit or restrict transactions or dealings with or involving specified countries, their governments, and in certain circumstances, their nationals, or with individuals and entities that are specially-designated nationals, narcotics traffickers, terrorists or terrorist organizations, or otherwise blocked or sanctioned pursuant to applicable regulations. In addition, we are subject to export controls and similar trade restrictions, which restrict or prohibit the export, re-export, and transfer of certain goods, software, technology, and services to specified countries, governments, entities, and individuals. For example, in December 2021, the U.S. Congress enacted the Uyghur Forced Labor Prevention Act in an effort to prevent what it views as forced labor and human rights abuses in the Xinjiang Uyghur Autonomous Region, or XUAR, of China. If it is determined that our\n\n \n\n77\n\n \n\nthird-party suppliers and manufacturers produce or manufacture our components or products wholly or in part from the XUAR, or certain designated entities, then we could be prohibited from importing such components or products into the United States. Similarly, the U.S. government has increasingly issued new restrictions limiting access to federal contracts or funds for companies that source certain types of equipment or services from designated companies in China or other so-called countries of concern.\n\nResponding to any enforcement action or related investigation may result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Any violation of the FCPA or other applicable anti-bribery or anti-corruption laws, anti-money laundering laws, or sanctions could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and suspension or debarment from U.S. government contracts, which could have a material adverse effect on our business, financial condition and results of operations.\n\nDefects or failures associated with our products could lead to recalls, safety alerts or litigation, as well as supply chain disruption, significant costs, and negative publicity.\n\nOur business is subject to significant risks associated with manufacture, distribution, and use of medical devices that are placed inside the human body, including the risk that patients may be severely injured by or even die from the misuse or malfunction of our products caused by design flaws or manufacturing defects. In addition, component failures, design defects, off-label uses, or inadequate disclosure of product-related information could also result in an unsafe condition or the injury or death of a patient. These problems could lead in the future to a recall or market withdrawal of, or issuance of a safety alert relating to, our products and result in significant costs, negative publicity, and adverse competitive pressure. The circumstances giving rise to recalls are unpredictable, and any recalls of existing or future products could have a material adverse effect on our business, financial condition and results of operations.\n\nWe provide a limited warranty that our products are free of material defects in workmanship and materials and conform to specifications, and offer to repair or replace defective products. Although we have had very few warranty claims to date, we bear the risk of potential warranty claims on our products. If we receive a significant number of warranty claims or our products require significant amounts of service after sale, our operating expenses may substantially increase and our business and financial results will be adversely affected. We have a limited history of commercial placements from which to judge our rate of warranty claims, and we expect that the number of warranty claims we receive may increase as we scale our operations and as our existing commercial placements age. If product returns or warranty claims are significant or exceed our expectations, we could incur unanticipated reductions in sales or additional operating expenditures for parts and service. In addition, our reputation could be damaged and our products may not achieve the level of market acceptance that we are targeting in order to achieve and maintain profitability. In the event that we attempt to recover some or all of the expenses associated with a warranty claim against us from our suppliers or vendors, we may not be successful in claiming recovery under any warranty or indemnity provided to us by such suppliers or vendors or that any recovery from such vendor or supplier would be adequate.\n\nThe medical device industry has historically been subject to extensive litigation over product liability claims. We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury or death, even if due to physician error. In addition, an injury or death that is caused by the activities of our suppliers, such as those that provide us with components and raw materials, or by an aspect of a treatment used in combination with our products, such as a complementary drug or anesthesia, may be the basis for a claim against us by patients, hospitals, ASCs, physicians, or others purchasing or using our products, even if our products were not the actual cause of such injury or death. We may choose to settle any claims to avoid fault and complication not due to failure of our products. An adverse outcome involving one of our products could result in reduced market acceptance and demand for all of our products and could harm our reputation and our ability to market our products in the future. In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our premarket notifications or applications for marketing. Any of the foregoing problems could disrupt our business and have a material adverse effect on our business, financial condition and results of operations.\n\nAlthough we carry product liability insurance in the United States and in other countries in which we conduct business, including for clinical trials and product marketing, we can give no assurance that such coverage will be available or adequate to satisfy any claims. Product liability insurance is expensive, subject to significant deductibles and exclusions, and may not be available on acceptable terms, if at all. If we are unable to obtain or maintain insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect against potential product liability claims, we could be exposed to significant liabilities. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business, financial condition and results of operations. Defending a suit, regardless of its merit or eventual outcome, could be costly, could divert management’s attention from our business and might result in adverse publicity, which could result in reduced acceptance of our products in the market, product recalls, or market withdrawals.\n\n \n\n78\n\n \n\nWe are required to file adverse event reports under Medical Device Reporting (MDR) regulations with the FDA that are publicly available on the FDA’s website. We are required to file MDRs if our products may have caused or contributed to a serious injury or death or malfunctioned in a way that could likely cause or contribute to a serious injury or death if it were to recur. Any such MDR that reports a significant adverse event could result in negative publicity, which could harm our reputation and future sales. If we fail to report events required to be reported to the FDA within the required timeframes, or at all, the FDA could take enforcement action and impose sanctions against us. Any such adverse event involving our products also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, would require our time and capital, distract management from operating our business and may harm our reputation and have a material adverse effect on our business, financial condition and results of operations.\n\nOur employees, independent contractors, consultants, commercial partners, distributors, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.\n\nWe are exposed to the risk that our employees, independent contractors, commercial team, consultants, commercial partners, distributors, and vendors may engage in fraudulent or illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct, or disclosure of unauthorized activities to us that violates: (i) FDA laws and laws of other similar foreign regulatory bodies, including those laws requiring the reporting of true, complete and accurate information to such regulators; (ii) manufacturing standards; (iii) healthcare fraud and abuse laws, including anti-kickback law and patient inducement laws, in the United States and similar foreign fraudulent misconduct laws; or (iv) laws that require the true, complete and accurate reporting of financial information or data. These laws may impact, among other things, future sales, marketing, and education programs. In particular, the promotion, sales, and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commissions, certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.\n\nIt is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, individual imprisonment, imposition of a corporate integrity agreement, additional integrity reporting, compliance and oversight obligations, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and curtailment of operations, any of which could materially and adversely affect our ability to operate our business and our results of operations. Whether or not we are successful in defending against any such actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations, which could have a material adverse effect on our business, financial condition and results of operations.\n\nEnvironmental and health safety laws may result in liabilities, expenses, and restrictions on our operations. Failure to comply with environmental laws and regulations could subject us to significant liability.\n\nOur research and development and supply chain operations involve the use of hazardous substances and are subject to a variety of federal, state, local and foreign environmental laws and regulations relating to the storage, use, discharge, disposal, remediation of, and human exposure to, hazardous substances and the sale, labeling, collection, recycling, treatment, and disposal of products containing hazardous substances. Liability under environmental laws and regulations can be joint and several and without regard to fault or negligence. Compliance with environmental laws and regulations may be expensive and noncompliance could result in substantial liabilities, fines and penalties, personal injury and third-party property damage claims and substantial investigation and remediation costs. Environmental laws and regulations could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations. We cannot assure you that violations of these laws and regulations will not occur in the future or have not occurred in the past as a result of human error, accidents, equipment failure or other causes. The expense associated with environmental regulation and remediation could materially and adversely our business, financial condition and results of operations.\n\nFederal, state, local, and foreign laws regarding environmental protection, hazardous substances and human health and safety may adversely affect our business. These operations are permitted by regulatory authorities, and the resultant waste materials are disposed of in material compliance with environmental laws and regulations. Using hazardous substances in our operations exposes us to the\n\n \n\n79\n\n \n\nrisk of accidental injury, contamination or other liability from the use, storage, importation, handling, or disposal of hazardous materials. If our or our suppliers’ operations result in the contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and fines, and any liability could significantly exceed our insurance coverage and have a material adverse effect on our business, financial condition, and results of operations. Liability under environmental laws and regulations can be joint and several and without regard to fault or negligence. Compliance with environmental laws and regulations may be expensive, and non-compliance could result in substantial liabilities, fines and penalties, personal injury and third-party property damage claims and substantial investigation and remediation costs. Environmental laws and regulations could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations. We cannot assure you that violations of these laws and regulations will not occur in the future or have not occurred in the past as a result of human error, accidents, equipment failure, or other causes. The expense associated with environmental regulation and remediation could materially and adversely affect our business, financial condition and results of operation.\n\nWe are subject to, or may in the future become subject to, ever-evolving federal, state, and foreign laws and regulations imposing obligations on how we collect, store, use and process information collected from or about individuals or their procedures using our products. Our or our vendors’ actual or perceived failure to comply with such obligations could materially and adversely our business. Ensuring compliance with such legal requirements could also impair our efforts to maintain and expand our customer base, and thereby decrease our revenue.\n\nIn the conduct of our business, we may at times process personal information, including health-related personal information including from and about patients, as well as our employees and business contacts. When conducting clinical trials, we face risks associated with collecting trial participants’ data, especially health data, in a manner consistent with applicable laws and regulations, such as the Common Rule, GCP guidelines, or FDA human subject protection regulations. We also face risks inherent in handling large volumes of data and in protecting the security of such data. In addition to specific healthcare laws and regulations, the U.S. federal government and various states have adopted or proposed laws, regulations, guidelines, and rules with respect to the collection, distribution, use, and storage of personal information of patients. We also depend on a number of third party vendors in relation to the operation of our business, a number of which process personal information on our behalf.\n\nAs our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. In the United States, HIPAA imposes data privacy, security and breach notification obligations, on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors. HIPAA requires covered entities and business associates to, among other things, develop and maintain policies with respect to the protection of, use and disclosure of protected health information (PHI). To the extent we create, receive, maintain or transmit PHI on behalf of covered entity customers or other third parties as a business associate under HIPAA, we are required to comply with applicable provisions of the HIPAA privacy, security and breach notification rules. HIPAA imposes, among other things, certain standards relating to the privacy, security, and breach reporting of individually identifiable health information. To the extent we are found to be out of compliance with HIPAA, we could face significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance. HIPAA also authorizes state Attorneys General to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.\n\nFurthermore, violation of consumers’ privacy rights or failure to take appropriate steps to keep consumers’ personal information secure may constitute unfair and/or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, including entities subject to HIPAA. The Federal Trade Commission (FTC) expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits particularly strong safeguards.\n\nIn addition, in recent years, certain states have adopted or modified data privacy and security laws and regulations that may apply to our business. For example, the California Consumer Privacy Act (CCPA) requires businesses that process personal information of California residents to, among other things: provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt-out of certain disclosures of their personal information; and enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf. The enactment of the CCPA is prompting a wave of similar legislative developments in other states in the United States, which creates a patchwork of\n\n \n\n80\n\n \n\noverlapping but different state laws. For example, since the CCPA went into effect, comprehensive privacy statutes that share similarities with the CCPA are now in effect and enforceable in numerous states, and will soon be enforceable in several other states as well. Similar laws have been proposed in many other states and at the federal level as well. Certain states have also enacted new laws regulating specific types of personal information, such as health data, including the Washington My Health My Data Act and Nevada’s Senate Bill 370. In the event we are subject to such laws, they impose, among other things, onerous notice and consent obligations, and prohibit certain personal information processing. To the extent we are found to be out of compliance with such laws, we could face negative publicity, government investigations and enforcement actions, claims by third parties (including class action lawsuits and private litigation) and damage to our reputation, any of which could have a material adverse effect on our business, financial condition and results of operations. As a result, our processing of health data in such states may subject us to additional compliance obligations and expose us to increased risk of liability.\n\nAdditionally, laws, regulations, and standards covering marketing, advertising, and other activities conducted by telephone, email, mobile devices, and the internet may be or become applicable to our business. If we fail to comply with these laws, regulations, and standards, we could face liability, reputational harm, and experience other impacts that could have a material adverse effect on our business.\n\nFurther, laws in all 50 U.S. states require businesses to provide notice to consumers whose personal information has been disclosed as a result of a data breach. These laws are not consistent, and compliance in the event of a widespread data breach may be difficult and costly. We also may be contractually required to notify consumers or other counterparties of a security breach. Regardless of our contractual protections, any actual or perceived security breach or breach of our contractual obligations could harm our reputation and brand, expose us to potential liability or require us to expend significant resources on data security and in responding to any such actual or perceived breach.\n\nWe also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in various jurisdictions in which we do business. These laws are in some cases relatively new and the interpretation and application of these laws are uncertain, may be inconsistent with or restrict our collection, storage, transfer, use and disclosure of personal information, and may require changes to our data processing practices and policies, including the acceptance of more onerous obligations in our contracts or additional costs, and we may be unable to make such changes and modifications in a commercially reasonable manner, or at all.\n\nThis risk is enhanced in certain jurisdictions and, as we expand our operations domestically and internationally, we may be subject to additional laws in other jurisdictions. Any actual or perceived failure by us or the third parties with whom we work to comply with privacy or security laws, policies, legal obligations, or industry standards, or any security incident that results in the unauthorized release or transfer of personally identifiable information, may result in governmental enforcement actions and investigations by U.S. federal and state regulatory authorities, fines and penalties, claims, proceedings or actions against us by individuals, consumer rights groups, government agencies, or others and we could incur significant costs in investigating and defending such claims, orders to make changes to our business, and/or adverse publicity, including by consumer advocacy groups and other private parties, and could cause our customers, their patients, and other healthcare professionals to lose trust in us, which could materially and adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations.\n\nDisruptions at the FDA and other government agencies caused by funding shortages, staffing limitations, government shutdowns or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, reviewed, approved or commercialized in a timely manner or at all, which could materially and adversely affect our business.\n\nThe ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new medical devices or modifications to be approved or cleared by necessary government agencies, which would materially and adversely affect our business. For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities. In addition, the current U.S. Presidential administration has issued certain policies and Executive Orders directed towards reducing the employee headcount and costs associated with U.S. administrative agencies, including the FDA, and it remains unclear the degree to which these efforts may limit or otherwise adversely affect the FDA’s ability to conduct routine activities.\n\n \n\n81\n\n \n\nIf a prolonged government shutdown occurs, or if funding shortages or staffing limitations hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other such regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.\n\nRisks Related to Ownership of Our Common Stock\n\nThe price of our stock may be volatile, and you could lose all or part of your investment.\n\nThe price of our stock may be volatile, and you could lose all or part of your investment. The stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this prospectus, these factors include:\n\n•\nthe timing and results of preclinical trials and clinical trials of our current and future products or those of our competitors;\n\n•\nthe success of competitive products or announcements by potential competitors of their product development efforts;\n\n•\nregulatory actions with respect to our products or our competitors’ products;\n\n•\nactual or anticipated changes in our growth rate relative to our competitors;\n\n•\nregulatory or legal developments in the United States and other countries;\n\n•\nthe recruitment or departure of key personnel;\n\n•\nannouncements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations, or capital commitments;\n\n•\nactual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;\n\n•\nfluctuations in the valuation of companies perceived by investors to be comparable to us;\n\n•\nmarket conditions in the medical device sector;\n\n•\nchanges in the structure of healthcare payment systems;\n\n•\nannouncement or expectation of additional financing efforts;\n\n•\nsales of our common stock by us, our insiders, or our other stockholders;\n\n•\nthe concentration in ownership of our common stock;\n\n•\nexpiration of lock-up agreements;\n\n•\nlawsuits threatened or filed against us, including litigation by current or former employees, alleging wrongful termination, sexual harassment, whistleblower, or other claims; and\n\n•\ngeneral economic, industry and market conditions.\n\nThe realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our common stock, which could also cause you to lose all or part of your investment.\n\nIn addition, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could materially and adversely affect our business.\n\nAlthough our common stock is listed on Nasdaq, an active, liquid and orderly trading market for our shares may not be sustained. The trading market for our common stock has been, and may continue to be, volatile. The lack of a sustained active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of a sustained active market may also reduce the fair market value of your shares. Furthermore, a less active market may also impair our\n\n \n\n82\n\n \n\nability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic collaborations or acquire companies, technologies, or other assets by using our shares of common stock as consideration.\n\nWe may fail to satisfy the continued listing requirements of Nasdaq.\n\nIf we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with the listing requirements of Nasdaq.\n\nSales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.\n\nSales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.\n\nThe clear market restrictions and lock-up agreements entered into in connection with our IPO will expire 180 days after May 7, 2026. When this restricted period expires, we and our securityholders subject to lock-up agreements will be able to sell shares in the public market. In addition, BofA Securities, Inc., J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements at any time and for any reason. Sales of a substantial number of such shares upon expiration of the lock-up agreement, the perception that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.\n\nMoreover holders of an aggregate of approximately 22.0 million shares of our common stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also aim to register all shares of common stock that we may issue under our equity incentive plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements.\n\nIn addition, in the future, we may issue additional shares of common stock, or other equity or debt securities convertible into common stock, in connection with a financing, acquisition, employee arrangement, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could cause the price of our common stock to decline.\n\nOur principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.\n\nAs of May 31, 2026, our executive officers, directors, holders of 5% or more of our capital stock, and their respective affiliates beneficially owned a significant percentage of our outstanding common stock. As a result, such persons, to the extent they act together, will have the ability to significantly influence all matters submitted to our board of directors or stockholders for approval, including the appointment of our management, the election and removal of directors and approval of any significant transaction, as well as our management and business affairs. This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders. We are an “emerging growth company,” and a “smaller reporting company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.\n\nWe are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including:\n\n•\nbeing permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our public disclosures;\n\n \n\n83\n\n \n\n•\nnot being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;\n\n•\nnot being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;\n\n•\nreduced disclosure obligations regarding executive compensation in our public disclosures, including in our periodic reports and proxy statements; and\n\n•\nexemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.\n\nWe cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.\n\nWe will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering (i.e., the fiscal year ended December 31, 2031).\n\nUnder the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.\n\nWe are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.\n\nWe have identified a material weakness in our internal control over financial reporting. If we are unable to design and maintain effective internal control over financial reporting, our investors may lose confidence in the accuracy and completeness of our financial reports, which could adversely affect our stock price.\n\nWe identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.\n\nWe did not design and maintain effective controls over the review of inputs in the calculation of net loss per share attributable to common stockholders. The material weakness resulted in a revision to the weighted average number of shares and net loss per share attributable to common stock holders within the statement of operations and related disclosures as of and for the year ended December 31, 2025. Additionally, this material weakness could result in misstatements to net loss per share attributable to common stockholders and related disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.\n\nWe are taking steps to remediate the material weakness and to strengthen our internal control over financial reporting, including reviewing and prioritizing this control deficiency for remediation. The material weakness will not be considered remediated until management completes the design and implementation of the controls and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. The measures we will take may not be sufficient to remediate the material weakness we have identified or avoid potential future material weaknesses. If the steps we take do not remediate the material weakness in a timely manner, we will be unable to conclude that we maintain effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected.\n\n \n\n84\n\n \n\nOur management will be required to evaluate the effectiveness of our internal control over financial reporting beginning with our Annual Report on Form 10-K for the year ended December 31, 2027. As part of that evaluation, we may identify additional control deficiencies that are determined to constitute one or more material weaknesses. In addition, there can be no assurance that our remediation efforts will be successful, that our internal control over financial reporting will be effective as a result of these efforts, or that any future control deficiencies identified may not be material weaknesses that would be required to be reported in future periods.\n\nWe do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.\n\nWe have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to any appreciation in the value of their stock. Any future determination related to dividend policy will be made at the discretion of our board of directors, subject to applicable laws, and will depend upon, among other factors, our results of operations, prospects, financial condition, contractual restrictions and capital requirements. In addition, our ability to pay cash dividends on our capital stock is limited by the terms of the Loan and Security Agreement and may be limited by the terms of any future debt or preferred securities we issue or any future credit facilities we enter into. Accordingly, you will have to, for the foreseeable future, rely on sales of your common stock after price appreciation, which may never occur, as the only way to realize any future gains on your investments.\n\nAnti-takeover provisions in our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the market price of our common stock.\n\nOur amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could depress the market price of our common stock by acting to discourage, delay, or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions, among other things:\n\n•\nestablish a classified board of directors so that not all members of our board are elected at one time;\n\n•\npermit only the board of directors to establish the number of directors and fill vacancies on the board;\n\n•\nprovide that directors may only be removed “for cause” and only with the approval of a majority of the voting power of the issued and outstanding capital stock;\n\n•\nauthorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”);\n\n•\neliminate the ability of our stockholders to call special meetings of stockholders;\n\n•\nprohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;\n\n•\nprohibit cumulative voting;\n\n•\nauthorize our board of directors to amend the bylaws;\n\n•\nestablish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and\n\n•\nrequire a super-majority vote of stockholders to amend some provisions described above.\n\nIn addition, Section 203 of the General Corporation Law of the State of Delaware (DGCL), prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.\n\nAny provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our common stock.\n\n \n\n85\n\n \n\nOur amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.\n\nOur amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) is the exclusive forum for the following (except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within 10 days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction):\n\n•\nany derivative action or proceeding brought on our behalf;\n\n•\nany action asserting a claim of breach of fiduciary duty;\n\n•\nany action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; and\n\n•\nany action asserting a claim against us that is governed by the internal-affairs doctrine.\n\nThis provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.\n\nSuch amended and restated bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, against any person in connection with any offering of the Company’s securities, including, without limitation and for the avoidance of doubt, any auditor, underwriter, expert, control person, or other defendant.\n\nThese exclusive-forum provisions may increase costs for a stockholder to bring a claim and may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. We also note that stockholders cannot waive compliance (or consent to noncompliance) with the federal securities laws and the rules and regulations thereunder. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find either exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially and adversely affect our business.\n\nOur board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.\n\nOur amended and restated certificate of incorporation authorizes our board of directors, without the approval of our stockholders, to issue shares of our preferred stock, subject to limitations prescribed by applicable law, rules, and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences, and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences, and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.\n\nOur disclosure controls and procedures may not prevent or detect all errors or acts of fraud.\n\nAs a public company, we are subject to the periodic reporting requirements of the Exchange Act. We must design our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.\n\nThese inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new\n\n \n\n86\n\n \n\nrelationship or arrangement, causing us to fail to make a required related party transaction disclosure. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.\n\nGeneral Risk Factors\n\nWe will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices. Additionally, if we fail to maintain effective internal control over financial reporting, our ability to produce accurate financial statements on a timely basis could be impaired.\n\nIn connection with the preparation of our financial statements, we identified a material weakness in our internal control over financial reporting. Specifically, we did not design and maintain effective controls over the review of the inputs in the calculation of net loss per share attributable to common stockholders. The material weakness resulted in a revision to the weighted average number of shares and net loss per share attributable to common stockholders within the statement of operations and related disclosures as of and for the year ended December 31, 2025. Additionally, this material weakness could result in misstatements to net loss per share attributable to common stockholders and related disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. We are in the process of implementing remediation measures, including the establishment of a control over the review of the calculation of weighted-average shares outstanding and net loss per share. The material weakness will not be considered remediated until management completes the design and implementation of the controls and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.\n\nAs a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an “emerging growth company.” We will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly, which will increase our operating expenses. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain sufficient coverage. We cannot accurately predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers.\n\nIn addition, as a public company we are required to incur additional costs and obligations in order to comply with SEC rules that implement Section 404 of the Sarbanes-Oxley Act. Under these rules, beginning with our Annual Report on Form 10-K for the year ended December 31, 2027, we will be required to make a formal assessment of the effectiveness of our internal control over financial reporting, and once we cease to be an emerging growth company, we will be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaging in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are designed and operating effectively, and implement a continuous reporting and improvement process for internal control over financial reporting.\n\nThe rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify additional material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.\n\nIf we are not able to remediate this material weakness and comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities.\n\n \n\n87\n\n \n\nMacroeconomic conditions could harm our business, financial condition and results of operations.\n\nMacroeconomic conditions, such as high inflationary pressure, changes to monetary policy, high interest rates, volatile currency exchange rates, credit and debt concerns, decreasing consumer confidence and spending, including capital spending, concerns about the stability and liquidity of certain financial institutions, the introduction of or changes in tariffs or trade barriers, and global recessions can adversely impact demand for our products, which could negatively impact our business, financial condition and results of operations. Recent macroeconomic conditions have been adversely impacted by geopolitical instability and military hostilities in multiple geographies and monetary and financial uncertainties.\n\nThe impacts of these macroeconomic conditions, and the actions taken by governments, central banks, companies, and consumers in response, have resulted in, and may continue to result in, higher inflation in the United States and globally, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including additional increases in interest rates. Other adverse impacts of recent macroeconomic conditions have been, and may continue to be, imposition of tariffs and other trade measures, supply chain constraints, logistics challenges, liquidity concerns in the broader financial services industry and fluctuations in labor availability.\n\nArtificial intelligence presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal information.\n\nIssues in the use of AI, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations. As with many technological innovations, AI presents risks and challenges that could impact our business. We may adopt and integrate generative AI tools throughout our business, including into our information systems. Our vendors may incorporate generative AI tools into their services and offerings without disclosing this use to us, and the providers of these generative AI tools may not meet existing or rapidly evolving regulatory or industry standards with respect to data privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience. Any integration of AI in our or any third party’s operations, products or services is expected to pose new or unknown cybersecurity risks and challenges. If we, our vendors, or our third-party partners experience an actual or perceived breach or data privacy or security incident because of the use of generative AI, we may lose valuable intellectual property and Confidential Information and our reputation and the public perception of the effectiveness of our security measures could be harmed. Further, bad actors around the world use increasingly sophisticated methods, including the use of AI, to engage in illegal activities involving the theft and misuse of personal information, Confidential Information, and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.\n\nIf securities or industry analysts do not publish research or reports, or if they publish adverse or misleading research or reports, regarding us, our business or our market, our stock price, and trading volume could decline.\n\nThe trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us, our business, or our market. We do not currently have and may never obtain research coverage by securities or industry analysts. If no or few securities or industry analysts commence coverage of us, the stock price would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue adverse or misleading research or reports regarding us, our business model, our intellectual property, our stock performance, or our market, or if our results of operations fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.\n\nOur ability to use our net operating loss carryforwards or certain other tax attributes to offset future taxable income or income taxes, as applicable, may be subject to certain limitations.\n\nAs of December 31, 2025, and 2024, the Company had U.S. federal net operating loss (NOL) carryforwards of approximately $127.4 million and $88.4 million, respectively. For U.S. federal income tax purposes, NOLs generated in tax years beginning before January 1, 2018, can be carried forward for up to 20 years, and NOLs generated in tax years beginning after December 31, 2017, can be carried forward indefinitely but can only offset up to 80% of taxable income in any given tax year beginning after December 31, 2020. Of the total U.S. federal NOL carryforward as of December 31, 2025, $22.1 million will begin to expire in 2027 and $105.3 million will not expire but will be subject to the 80% utilization limit.\n\nOur U.S. federal NOL carryforwards could expire unused, to the extent subject to expiration, and be unavailable to offset future taxable income because of their limited duration or because of restrictions under U.S. federal law.\n\n \n\n88\n\n \n\nIn addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change” (generally defined as a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points (by value) over a rolling three-year period), the corporation’s ability to use its pre-change NOL carryforwards or certain other pre-change tax attributes to offset its post-change taxable income or income taxes, as applicable, may be limited. Similar rules may apply under state tax laws. We believe (but have not undertaken any formal analysis or other assessment to determine) that no such ownership changes have occurred to date. Our ability to utilize our NOL carryforwards or other tax attributes to offset future taxable income or income taxes, as applicable, may be limited if such ownership changes have occurred. Furthermore, we may experience ownership changes as a result of our initial public offering or in the future as a result of subsequent shifts in our stock ownership, some of which are outside our control, which could limit (or further limit) our ability to use our NOL carryforwards and other tax attributes. We have not conducted any studies to determine future annual limitations, if any, that could result from such changes in our stock ownership. Any such limitations on our ability to utilize our NOL carryforwards and certain other tax attributes could have a material adverse effect on our business, financial condition and results of operations.\n\nChanges in tax laws could have a material adverse effect on our business, financial condition, and results of operations.\n\nNew income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, or interpreted, changed, modified or applied adversely to us. The likelihood of any such changes being enacted or implemented is uncertain. We are currently unable to predict whether such changes will occur and, if so, the ultimate impact on our business. To the extent that such changes have a negative impact on us, our customers or our suppliers, including as a result of related uncertainty, these changes could have a material adverse effect on our business, financial condition and results of operations.\n\nTaxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could materially and adversely affect our results of operations.\n\nWe may not collect sales and use, value added, and similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are not applicable. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Any jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties, and interest, and we may be required to collect such taxes in the future. Such tax assessments, penalties and interest or future requirements may materially and adversely affect the results of our operations.\n\nWe could be subject to securities class action litigation.\n\nIn the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because medical device and healthcare companies have experienced significant stock price volatility in recent years. If we face such litigation, even if ultimately decided in our favor, it could result in substantial costs and a diversion of our management’s attention and resources, which could harm our business."}